In the 1961 case of Household Fin. Corp. v. DeShazo, the Washington Supreme Court held that section 17(a)(2) of the Federal Bankruptcy Act limited a creditor to recovery of the amount of an additional loan made in reliance upon a false financial statement, and did not permit recovery of prior indebtedness—not initially obtained by fraud—which was refinanced in the same transaction and included in the total amount of a new note.
Washington Case Law,
Bankruptcy—Discharge—Effect of False Financial Statement Upon Prior Indebtedness,
40 Wash. L. Rev.
Available at: https://digitalcommons.law.uw.edu/wlr/vol40/iss2/9