First National Bank of Omaha v. Manriquez (In re Manriquez)

Alfredo Manriquez (debtor) held credit cards including a Visa card issued by First National Bank of Omaha (First National) (creditor). Manriquez and his wife’s monthly expenses regularly exceeded their monthly income, and Manriquez typically made only minimum payments on the credit cards each month. Between September 19 and October 10, 2006, the Manriquezes charged over $6,000 to the Visa card, including $2,500 for a cruise. Manriquez never made any payments toward the card balance following these purchases. On October 16, 2006, Manriquez retained a bankruptcy attorney. The Manriquezes subsequently filed for bankruptcy and sought to discharge the Visa card’s $6,600 balance. First National sought to prevent the discharge, asserting that the debt was nondischargeable under 11 U.S.C. §§ 523(a)(2)(A) and 523(a)(2)(C), which excepted from discharge debts obtained by fraud and debts for luxury goods, respectively. The bankruptcy court found that the cruise was a luxury good and excepted the $2,500 cruise-purchase debt from discharge. However, the court found that the remaining credit-card debt was dischargeable. The court explained that although Manriquez’s use of the credit card was an implied representation that he intended to repay the debt, the totality of the circumstances surrounding the charges suggested that Manriquez had not made that representation with the intent to deceive. First National appealed to the federal district court, challenging the bankruptcy court’s decision to discharge the debt. First National contended that the debt should be found nondischargeable under § 523(a)(2)(A)’s fraud exception because the use of a credit card implies that the cardholder has both the intent and the ability to repay the charges, and Manriquez knew when he made the charges that he did not have the ability to repay.