Page 6 of 10  Credit, Inc. v Perry (In re Perry), 547 B.R. 650 (M.D. La. 2016). Stephen Binning testified that  Tower would not have made the loans to Gwendolyn Hickerson had it known of her outstanding  payday loans. He also testified that Tower's policy was to not loan to borrowers with  outstanding payday loans unless they borrow enough to pay off those loans. Accordingly, the  omission of the payday loans from the debtor's 2011 and 2014 credit applications was material.  Even though the debtor is bound by her deemed admissions, Tower still must prove that it  reasonably relied on the debtor's applications when it made both the 2011 and 2014 loans. In the  Fifth Circuit:  The reasonableness of a creditor's reliance ... should be judged in light of the totality of the circumstances. The bankruptcy court may consider, among other things: whether there had been previous business dealings with the debtor that gave rise to a relationship of trust; whether there were any “red flags” that would have alerted an ordinarily prudent lender to the possibility that the representations relied upon were not accurate; and whether even minimal investigation would have revealed the inaccuracy of the debtor's representations.  16    A basic principle of bankruptcy law is that exceptions to discharge are to be strictly  construed against the creditor and liberally construed in favor of the debtor to facilitate the  debtor's \"fresh start.\"  17 Given this, the Fifth Circuit's mandate is clear: lenders cannot blithely  rely on statements in loan applications in the face of facts that should indicate the borrower's  statements are not trustworthy.   16Coston v. Bank of Malvern (Matter of Coston), 991 F.2d 257, 261 (5th Cir.1993).See also GulfSouth Credit, Inc. v. Perry (In re Perry), 547 B.R. 650, 655 (Bankr. M.D. La. 2016).    17Hudson v. Raggio & Raggio, Inc. (Matter of Hudson), 107 F.3d 355, 356 (5th Cir. 1997).  Case 18-01035 Doc 28 Filed 05/30/19 Entered 05/30/19 11:22:16 Page 6 of 10

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