611 B.R. 657 (9th Cir. BAP. 2020), BAP OR-19-1010-LTaF, In re Mcharo

Docket Nº:BAP OR-19-1010-LTaF
Citation:611 B.R. 657
Opinion Judge:LAFFERTY, Bankruptcy Judge
Party Name:IN RE: Blake MCHARO and India Rose Mcharo, Debtors. v. Blake Mcharo, Appellee State of Oregon, Department of Human Services, Appellant, Bk. 6:18-bk-61242 Adv. 6:18-ap-06052
Attorney:Ellen F. Rosenbaum and Carolyn G. Wade on brief for Appellant State of Oregon, Department of Human Services.
Judge Panel:Before: LAFFERTY, TAYLOR, and FARIS, Bankruptcy Judges.
Case Date:January 09, 2020
Court:United States Bankruptcy Courts, Ninth Circuit

Page 657

611 B.R. 657 (9th Cir. BAP. 2020)

IN RE: Blake MCHARO and India Rose Mcharo, Debtors.

State of Oregon, Department of Human Services, Appellant,


Blake Mcharo, Appellee

Nos. BAP OR-19-1010-LTaF

Bk. 6:18-bk-61242

Adv. 6:18-ap-06052

United States Bankruptcy Appellate Panel of the Ninth Circuit

January 9, 2020

Submitted Without Argument on November 21, 2019

Ordered Published - February 7, 2020

Page 658

Appeal from the United States Bankruptcy Court for the District of Oregon, Honorable David W. Hercher, Bankruptcy Judge, Presiding

Ellen F. Rosenbaum and Carolyn G. Wade on brief for Appellant State of Oregon, Department of Human Services.

Before: LAFFERTY, TAYLOR, and FARIS, Bankruptcy Judges.


LAFFERTY, Bankruptcy Judge


The State of Oregon, Department of Human Services (DHS), appeals the bankruptcy court’s judgment in favor of chapter 71 debtor Blake Mcharo on DHS’s claim for nondischargeability under § 523(a)(2)(A). After debtors failed to answer DHS’s complaint, the bankruptcy court entered default against each of them and entered judgment against co-debtor India Mcharo. The court, however, declined

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to enter judgment against Blake2 because it found that his failure to disclose that he had obtained employment was an unwritten statement respecting his financial condition and thus not within the purview of § 523(a)(2)(A).

We conclude that the bankruptcy court erred in its interpretation of § 523(a)(2)(A) and therefore VACATE the judgment in favor of Blake and REMAND for further proceedings consistent with this disposition.


The facts are not in dispute. In August 2011, the Mcharos applied for public assistance cash benefits from DHS through the Temporary Assistance for Needy Families program (TANF). The application they signed included their agreements that: (1) they had given DHS true, correct, and complete information; (2) they understood that making false statements could result in state and federal penalties and the obligation to repay any overpaid benefits; (3) they would report changes in the information given to DHS; (4) the statements made on the application were true and correct, under penalty of perjury; and (5) they had read and understood their rights and responsibilities as set forth in both the application and in Form DHS 0415R. Form DHS 0415R requires that, while receiving benefits, the applicants must report any change in their source of income (i.e., getting, losing, or quitting a job) within ten days.

At the time the Mcharos filled out the application, Blake was not working. However, on October 13, 2011, he became employed with Rent-A-Center, Inc. and remained employed there until June 30, 2012.

On November 9, 2011, India completed an "Interim Change Report." In that document, she marked the "No" box next to the question, "Does anyone work?" Next, on June 7, 2012, India completed an application listing Blake as a member of her household but did not include him as a person for whom she was requesting benefits. In the section regarding household income, she answered "No" to the question "Does anyone have or expect to get any money?" She also left blank the question asking her to list earned income of anyone in the home who was related to her or her children.

At no point after the initial application did Blake sign or submit any document regarding the change in his employment status.

All during this period, between September 2, 2011, and June 30, 2012, the Mcharos were receiving TANF benefits.

On October 1, 2015, DHS recorded two distraint warrants, one against each of the Mcharos, showing the balance due for overpayment of public assistance benefits plus fees. DHS collected $1,276 from the Mcharos before they filed their chapter 7 petition.

The Mcharos filed a...

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