Hall v. Jackson, Adv. No. 05-5170, 2006 WL 2457847 (Bankr. M.D. Ga. August 23, 2006)(Hershner).
Prior to the Debtor’s bankruptcy filing in September 2005, she had borrowed significant funds via personal loans from the Plaintiff (Debtor’s sister) and through the use of Plaintiff’s credit cards with permission. Debtor continuously promised to pay Plaintiff back, and to either obtain a home equity loan or sell her residence in order to get the funds necessary to repay the loans.
Plaintiff filed an adversary proceeding requesting that the debt be excepted from discharge pursuant to 11 U.S.C. §523(a)(2)(A).
Plaintiff testified that she would not have made the loans except for Defendant’s promise that she would obtain a home equity loan or sell her residence. Plaintiff testified that she allowed Defendant to use the credit cards to make her house payments because Defendant’s residence was the way that Plaintiff was to be repaid. Plaintiff testified that she continued to allow Defendant to use her credit cards because Plaintiff was “too far in to stop.”
The court, after a trial, found the debt to be dischargeable —
The evidence shows that Defendant was, on a regular basis, pleading for financial help from Plaintiff. The Court can only conclude that Plaintiff knew that Defendant was in severe financial distress. …. The Court is persuaded that Defendant simply did not have the financial resources to honor her promise to obtain a home equity loan or sell her residence. As stated by Collier on Bankruptcy, the failure to perform a mere promise is not sufficient to make a debt nondischargeable. The Court is persuaded that Defendant honestly intended to repay Plaintiff’s loans. The Court from the evidence presented at trial finds no fraudulent intent on the part of Defendant. The Court is persuaded that Defendant’s obligation is dischargeable under section 523(a)(2)(A).