## Facts

- Alfredo Manriquez and his wife held several credit cards, including a Visa card issued by First National Bank of Omaha (First National).
- For a sustained period, the Manriquez household’s monthly expenses regularly exceeded monthly income.
- Manriquez typically made only minimum payments on his credit cards.
- Between September 19 and October 10, 2006, the Manriquezes charged more than $6,000 to the First National Visa card.
- The charges included approximately $2,500 for a cruise.
- After the September–October charges, Manriquez made no payments toward the Visa balance.
- On October 16, 2006, Manriquez retained a bankruptcy attorney.
- The Manriquezes later filed a Chapter 7 bankruptcy case and sought to discharge roughly a $6,600 balance on the First National Visa.
- First National filed an adversary proceeding seeking to except the Visa debt from discharge under 11 U.S.C. § 523(a)(2)(A) (fraud) and § 523(a)(2)(C) (luxury goods or services).
- The bankruptcy court treated the cruise purchase as a luxury expense and excepted that $2,500 portion from discharge, but ruled that the remaining balance was dischargeable.
- First National appealed to the U.S. District Court for the District of Colorado, arguing that the non-cruise charges should also be nondischargeable because card use implies both intent and ability to repay, and Manriquez allegedly knew he could not repay when he charged the purchases.

## Issues

1. Whether First National proved that the non-cruise portion of the Visa balance was nondischargeable under 11 U.S.C. § 523(a)(2)(A) because Manriquez incurred the charges with an intent to deceive based on an implied representation of intent to repay.
2. Whether credit-card use implies not only an intent to repay but also an ability to repay, such that inability to pay at the time of charging establishes fraud under § 523(a)(2)(A).
3. Whether the bankruptcy court clearly erred in finding, under the totality of the circumstances, that Manriquez lacked an intent to deceive as to the non-luxury charges.

## Decision

- The district court affirmed the bankruptcy court’s judgment.
- The $2,500 cruise charge was properly treated as a luxury-goods/services debt and was excepted from discharge under § 523(a)(2)(C).
- The remaining Visa balance was dischargeable because First National did not meet its burden to prove that Manriquez incurred the non-cruise charges with actual intent to deceive under § 523(a)(2)(A).
- The district court declined to treat a debtor’s financial condition or inability to repay, standing alone, as establishing fraudulent intent in a credit-card nondischargeability case.
- The district court deferred to the bankruptcy court’s factual finding on intent, applying clear-error review.

## Legal Principles

- Under 11 U.S.C. § 523(a)(2)(A), a creditor must prove actual fraud, including that the debtor acted with intent to deceive when the debt was incurred.
- In credit-card cases, use of the card may be treated as an implied representation of intent to repay, but nondischargeability still depends on proving that the implied representation was made with intent to deceive.
- A debtor’s financial distress, overspending, or inability to repay does not by itself establish fraudulent intent for § 523(a)(2)(A); intent is determined from the totality of the circumstances.
- Under 11 U.S.C. § 523(a)(2)(C), certain consumer debts for luxury goods or services incurred within the statutory lookback period are presumed nondischargeable, allowing a court to except specific charges (rather than the entire account) from discharge.
- On bankruptcy appeal, factual findings such as intent to deceive are reviewed for clear error, while legal conclusions are reviewed de novo.

## Conclusion

The district court affirmed a split discharge outcome: the cruise purchase was excepted from discharge as a luxury expense under § 523(a)(2)(C), but First National failed to prove that Manriquez incurred the remaining credit-card charges with intent to deceive under § 523(a)(2)(A), so the balance was discharged.


First National Bank of Omaha v. Manriquez (In re Manriquez), 2009 WL 3015161 (2009)