Ch. 7 Debtor Can Discharge Recent Credit Card Debts

Understand the complexities and nuances of the Bankruptcy Code to better advise clients and prepare for court.

By Diane Davis

A debtor can wipe out nearly $8,000 in credit card debt in bankruptcy because the bank that issued the card couldn’t prove she didn’t intend to repay it, the U.S. Bankruptcy Court for the Northern District of West Virginia held ( World’s Foremost Bank - Cabela’s Club Visa v. Black (In re Black) , 2017 BL 132021, Bankr. N.D. W.Va., Adversary No. 16-ap-43, No. 16-bk-532, 4/21/17 ).

Donna M. Black obtained a $7,993 cash advance using her World’s Foremost Bank credit card about two months before filing for bankruptcy.

The bank argued the balance couldn’t be wiped out in court. It said there was a presumption against discharging consumer goods in bankruptcy if the balance is owed to a single creditor and if charges for luxury goods exceed $675, or if services were incurred on or within 90 days before filing under Bankruptcy Code Section 523(a)(2)(C)(i).

The debtor’s intent is central to the inquiry, and it must be shown she intended to deceive the bank when she obtained and used the credit card, Judge Patrick M. Flatley wrote.

A presumption doesn’t arise because the bank failed to prove it and Black rebutted it with her testimony, the court said.

The bank failed to show what specific luxury goods were purchased other than $420 for boots at Cherokee Trading and a computer game, the court said. A $183 purchase at Kohl’s could have been for housewares needed after a fire destroyed her home.

Based on Black’s testimony, the purchases were reasonable and showed typical credit card usage, the court said.

The court also found that Black intended to repay the bank in the regular course of business and didn’t engage in any deception or trickery.

Dickie, McCarney & Chilcote, L.C., and Brumbaugh & Quandahl P.D., L.L.O., represented World’s Foremost Bank–Cabela’s Club Visa; Schrader, Byrd & Companion, PLLC, represented Black in the bankruptcy case; Black represented herself in the adversary proceeding; Sheehan and Nugent PLLC represented the trustee.

To contact the reporter on this story: Diane Davis in Washington at DDavis@bna.com

To contact the editor responsible for this story: Jay Horowitz at JHorowitz@bna.com

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