Some people like to borrow money from friends and relatives but have no intention of ever repaying the money back. This is plainly and simply taking advantage of the friend or relative. If the amount borrowed is small change, even a couple of hundred or a couple of thousand dollars, there may not be too much of a problem. The debt is easily forgotten and forgiven. But what if the money borrowed was $325,000 which debtor seeks to discharge in bankruptcy? The answer depends on the circumstances of the case.

If it is clearly shown that Debtor had no intent to repay the money when he borrowed it, then the debt is not dischargeable.  In Re Goepp, the Creditor and the Debtor had been friends since the 1960s. The Creditor was an 82 years old former college professor who lived in a nursing home. The court found him to be of diminished mental capacity. The Debtor was 69 years old. In 1993, he moved into his mother’s house where he cared for her and his older sister, who had Alzheimer. The Debtor was not employed. His primary source of income was a home equity loan that his mother had taken out on her house.

In other words, Debtor had a PH.D. in “smooching off relatives."After Debtor’s mother died in 1994, he continued to live on money from the home equity loan. For a second source of money, he used a Power of Attorney to access his sister’s IRA to pay for his expenses. His sister died in 2003. So, for ten years, from 1993 to 2003 he had no job and no income but lived off his mother’s home equity loan line and his sister’s IRA. But all good things come to an end. By 2005, he was out of money and being sued by his younger sister for mismanagement of the mother’s estate.

Since he ran out of relatives to borrow money from, he resorted to the next best thing, his friend. So, he told the Plaintiff about his money problems and the Plaintiff, being the good trusting friend that he was bit into the hook, line and sinker. Plaintiff started making loans to Debtor in 2006. In 2007, the Plaintiff gave a Power of Attorney to the Debtor. Debtor visited Plaintiff frequently. I wonder why? Because every time he visited Plaintiff, debtor would ask him for money, and Plaintiff would write him checks for the amounts he asked for. After all, “what are friends for, except to give money to!” sighed Plaintiff.