DISCHARGEABILITY – Fraud; Justifiable Reliance; Innocent Spouse 

Posted: 1:00 am Mon, February 8, 2010
By admin

Where a hotel appealed a bankruptcy court’s order discharging a debt incurred by a Chapter 7 debtor who failed to pay a $60,000 bill after hosting a “Red Hat” event at the hotel, the court clearly erred in finding that the hotel’s reliance was not justifiable, so the hotel was entitled to have the debt excepted from discharge due to the debtor’s fraud, but the debtor’s husband’s debt to the hotel is dischargeable because there was no evidence that he knew of the fraud, and the court’s avoidance of the hotel’s judicial lien on the debtors’ home is also affirmed. Judgment is affirmed in part; reversed in part.