Western Pennsylvania Debtor Beats Chase
By Stephen Otto, Pennsylvania Bankruptcy Attorney on Oct 11, 2007 in Bankruptcy Practice and Procedure, Benefits of Bankruptcy, Chapter 7 Bankruptcy, Pennsylvania
On September 19, 2997, Judge Warren Bentz of the Western District of Pennsylvania decided in favor the Debtor, Ronald E. Park, and against Chase Bank. In so doing, Judge Bentz rejected Chase’s arguments that a 2001 Dodge Caravan purchsed on a Chase credit card for $3,104.40 constituted a “luxury purchase” within ninety days of the bankruptcy filing in accordance with Section 523(a)(2)(C) of the United States Bankruptcy Code.
In the most compelling portion of the decision, Judge Bentz rejected Chase’s argument that a debtor who charges $3,104.40 on a Chase card while knowingly owing at least $38,000 in other unsecured obligations was fraudulent or in bad faith because the debtor knew or should have known that the debt could not be repaid. Judge Bentz reasoned that if Chase was willing to lend over $3,000 to the Debtor without any inquiry into the Debtor’s ability to repay, without asking the Debtor any questions regarding his assets or ability to repay, Chase should not now be permitted to argue that incurrence of the debt was somehow fraudulent. Judge Bentz’s opinion states as follows:
Chase argues that Debtor had some $38,000 in unsecured indebtedness and therefore knew, or should have known, that he could not repay the debt. But Chase, in extending credit on this credit card, never asked Debtor whether he had assets, nor did Chase ask if Debtor had other debts. Chase cannot now be heard to argue that it relied on Debtor having a good balance sheet.
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