A bankruptcy in Baltimore shows that a soured romantic relationship can lead to a nasty breakup, but not to a successful dischargeability complaint.
A basketball coach and a referee, both women, met during a game. A romantic relationship ensued, during which the referee loaned the coach some $40,000. After the romance ended, the coach filed under chapter 13, and the referee commenced an adversary proceeding contending that the debt was excepted from discharge under Section 523(a)(2)(B).
The case turned on two e-mails the coach sent early in the relationship in which she asked for a loan while disclosing more than $64,000 in debt. The e-mails did not disclose an additional $56,000 in student loans. The referee argued that the failure to disclose the student loans led to a debt obtained by use of a materially false written statement about the coach’s financial condition on which the referee “reasonably relied.”
Bankruptcy Judge Robert A. Gordon conducted a trial and discharged the debt for lack of reliance on a false statement.
Even had the referee known about the additional debt, it “would not have swayed her one bit,” he said. Because the coach’s e-mails were an “admission of utter personal financial incompetence,” the judge concluded that disclosure of the student loans “would not have mattered one whit” to the referee.
Recognizing the difference between commercial relationships and debts arising from affairs of the heart, Judge Gordon ended his opinion by citing Section 524(f) and saying that the coach is “free to voluntarily repay the debt if that is still her wish.”