Stuart v. Abraham (In re Abraham)
- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- 16-2968 (2nd Circuit, Jul 17,2017) Not Published
- Tag(s):
-
- Ruling:
- A debtor who omits from his schedules information that is material in bankruptcy, such as his income, is not entitled to a discharge.
- Procedural context:
- A creditor requested that the bankruptcy court hold that her debt was nondischargeable. The bankruptcy court allowed the creditor to amend her complaint to add a section 727(a)(4)(A) claim, which would prevent the debtor from receiving a discharge.
Following a bench trial, the bankruptcy court held that the debtor was not entitled to a discharge because of "errors and omissions" in his schedules.
The debtor appealed, and the district court affirmed. The debtor appealed again, and the Second Circuit affirmed once again.
- Facts:
- This short opinion is like a fairy tale, chock-full of travails and moral lessons.
The debtor filed a bankruptcy petition in August 2013. Four years previously, the creditor had loaned $75,000 to the debtor. No payments were ever made on the loan.
In his bankruptcy, the debtor claimed that he wasn't liable for the debt because the loan was for the benefit of his father-in-law. In other words, the debtor argued that he was a mere conduit. The bankruptcy court found that this argument lacked credibility. This is hardly surprising -- usually the son-in-law borrows money from the father-in-law, not vice versa.
Apparently spotting a rat, the bankruptcy court allowed the creditor to amend her complaint to allege a Section 727(a)(4)(A) claim that would prevent the debtor from receiving a discharge at all.
The trial evidence showed that the debtor's schedules were materially misleading. The debtor asserted that the errors and omissions were innocent, and the result of his reliance on his bankruptcy lawyer. The bankruptcy court, and the Second Circuit, didn't brook this malarkey. While the Second Circuit didn't say "liar, liar, pants on fire," the court dryly noted that the debtor's "excuses" were "unconvincing."
Lesson -- quit lying once you get caught. And don't blame your father-in-law.
- Judge(s):
- SACK, CARNEY, DRONEY
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