By Angeljean Chiaramida
---- — BOSTON — The federal court of appeals has upheld a bankruptcy court decision that a Byfield woman cannot file bankruptcy to avoid financial responsibility for the repayment of a debt she incurred fraudulently.
According to a Dec. 16 decision written by Chief Judge Sandra Lynch of the U.S. Court of Appeals for the First Circuit, Andrea Levasseur, currently of Byfield and formerly of Rowley, cannot expunge her debt of more than $124,000 on checks she wrote from a home equity loan on a home she no longer owned.
According to the court decision, Levasseur, at the time known as Andrea Sullivan, took out a line of credit secured by the equity on the home she owned on Wethersfield Street property in Rowley. On Nov. 14, 2003, however, Levasseur sold the Rowley home, paid off her first mortgage and the Fleet Bank Home Equity Account.
By selling the property, there was no property upon which the home equity line of credit could be secured, Lynch wrote, something Levasseur would know, for “she had worked for a real estate agent and had participated in closings before.”
In June 2003, the court stated that Levasseur purchased a home in Byfield and notified Fleet Bank of her new address, but not that she had sold the Rowley property. In mid-2005, Fleet merged with Bank of America and took over Levasseur’s checking and home equity line of credit. The bank periodically sent her statements for both accounts at her new address, because the credit line had never been formally closed following the sale of the property. One statement showed that the available line of credit amounted to $124,000, according to the court decision.
By June 2005, Lynch wrote, Levasseur’s husband’s business was not doing well and the family was having trouble paying its bills. That’s when Levasseur dipped into the line of credit on the home she no longer owned. She drew exactly $124,000 in checks from the Newburyport branch of the Bank of America home equity account, depositing the money in her Georgetown Savings account.
”The bankruptcy court also found that the Newburyport Bank of America tellers, based on available records, could not have determined that the Home Equity Account should have been closed when the Rowley property was sold and that Levasseur’s check requests should accordingly be denied,” Lynch wrote. “The bankruptcy court found that Levasseur’s testimony that she thought at the time that she was drawing on a different loan than the Home Equity Account was ‘thoroughly implausible.’”
When Levasseur failed to repay the money, Bank of America began foreclosure proceedings against the new owners of Levasseur’s former property. The new owners were insured by Old Republic National Insurance Company, which paid off the debt, then brought suit against Levasseur.
Failing to defend herself in the suit, a default judgement was entered against her in May 2007, but Levasseur never satisfied the initial judgment, Lynch wrote, and in September 2007, the court issued an alias execution in the amount of $159,845, plus post judgment interest of 12 percent per year.
Shortly after that ruling, in December 2007, Levasseur filed for bankruptcy, which could have washed away all her debts, including the one with Old Republic. But, in August 2008, Old Republic sought a determination to exempt from bankruptcy protection the $124,000 debt incurred by Levasseur due to “fraud, false pretenses or misrepresentation ... and willful and malicious injury.”
The bankruptcy court agreed with Old Republic and the court of appeals upheld its ruling. According to the Bankruptcy Code, debts incurred fraudulently and by willful and malicious injury by the debtor are exempt from protection by filing bankruptcy.
”The record plainly supports the bankruptcy court’s conclusion that Levasseur was fully aware that the Home Equity Account should no longer have been available for her to use after the sale of the Rowley property,” Lynch wrote. “When she twice visited the Newburyport branch to obtain certified checks from an account that she knew should not have been available, Levasseur acted under false pretense and with an intend to defraud. ... ‘(She) did not alert the bank to what she knew to be an error because she planned to use the error to her advantage.’”