Bankrupt day trader can’t escape $100,000 loan debt owed to ex-lover (Bkrtcy.D.Or.)

December 19, 2013

Practitioner Insights thumbnail 2(Editor’s Note: This post is an excerpt from an article appearing in Practitioner Insights on Westlaw Next)

A Chapter 7 debtor is still on the hook for a $100,000 loan from a woman with whom he had a long-term relationship, an Oregon bankruptcy judge has ruled, saying the man’s false claims that he would safely invest her funds precluded discharge of the debt.

In re Hanley, No. 12-38801; Murray v. Hanley, Adv. No. 13-3046, 2013 WL 6536370 (Bankr. D. Or. Dec. 13, 2013).

U.S. Bankruptcy Judge Randall L. Dunn of the District of Oregon based his decision on the credibility of the parties in proceedings “freighted with the baggage of a failed personal relationship.”

Debtor John M. Hanley and adversary plaintiff Susan L. Murray lived together for more than three years and at one point jointly owned a Boise, Idaho, home. Although they were never married, Murray changed her last name to Hanley before changing it back after the relationship ended.

According to the opinion, Hanley is a self-described “semi-retired securities trader” with a passion for “the stock market game.”

In April 2011 Murray loaned Hanley $100,000 documented by a promissory note bearing 6 percent interest that was due and payable in April 2012.

According to Murray’s testimony before the Bankruptcy Court, Hanley had requested the loan to allow him to recover from recent losses by investing cautiously and taking “baby steps,” stating the loan would be “risk free.”

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