Bankruptcy’s Exceptions to Discharge: When does a Statement about a Single Asset Respect the Debtor’s Financial Condition?

Section 523(a)(2)(A) of the Bankruptcy Code provides that a debt is nondischargeable if it is obtained by “false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s . . . financial condition.” In 2017, in In re Appling, the United States Court of Appeals for the Eleventh Circuit held that a false oral statement by a debtor to his creditor regarding a single asset constituted a statement respecting the debtor’s financial condition, allowing the debtor to discharge his liability to pay the debt. This ruling deepened a split among the courts as to whether a false statement regarding a single asset is a “statement respecting the debtor’s . . . financial condition.” This Comment argues that a statement must be substantial enough to actually provide insight as to the debtor’s financial condition to meet the requirements of Section 523(a), and further contends that the Eleventh Circuit’s analysis of “respecting” is inconsistent in its application of Supreme Court precedent to the interpretation of the Bankruptcy Code.