Where it was not clear whether the debtor’s educational loan was included in his discharge, Experian did not violate the FCRA by reporting it as an outstanding debt. Mader v. Experian Information Solutions, Inc., No. 20-3073 (2d Cir. Jan. 4, 2023). Read More
Tag Archive: Student loans
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Experian Not Required under FCRA to Know Legal Validity of Debt
Posted by NCBRC - January 11th, 2023
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Terms of Promissory Note Not Enough to Show Nondischargeability of Student Loan
Posted by NCBRC - April 5th, 2022
Because it was unclear whether the debtor’s private student loan was issued under the auspices of a federally-funded program, neither the debtor nor the student loan creditor were entitled to summary judgment on the issue of whether the loan was excepted from discharge under section 523(a)(8)(A)(i). Mazloom v. Navient Solutions, LLC., No. 18-60206, Adv. Proc. No. 20-80033 (Bankr. N.D.N.Y. March 29, 2022).
The debtor received a $38,400 private student loan through the EXCEL Grad Loan Program to fund her attendance in medical school. The lender was Nellie Mae, Navient’s predecessor in interest. The debtor filed for chapter 7 bankruptcy listing the loan as a “student loan.” Two years after she received her discharge, the bankruptcy court allowed the debtor to reopen her bankruptcy case to bring an adversary complaint against Navient seeking a declaration that her loan did not fall under any of the student loan exceptions enumerated in section 523(a)(8)(A) and had therefore been discharged in bankruptcy. Read More
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Absence of Evidence Defeats SJ for Both Debtor and Student Loan Creditor
Posted by NCBRC - October 5th, 2021
Where neither the debtor nor the creditor presented sufficient evidence to establish or counter the three prongs of the Brunner undue hardship test, neither was entitled to summary judgment on the debtor’s adversary complaint seeking discharge of his student loan. Rosenberg v. ECMC, No. 20-688 (S.D. N.Y. Sept. 29, 2021).
The debtor financed his undergraduate and law school degrees in part with student loans. He worked for a time as a lawyer but found the work unsatisfying and quit to open his own business dealing in outdoor equipment sales and tours. At the time he filed for chapter 7 bankruptcy his consolidated student loans had grown to over $220,000.00. He was 45 years old, never married, and had no dependents, but had suffered an injury requiring surgery. It was undisputed that the debtor’s monthly expenses were $4,005.00 and his monthly income $2,456.24. The debtor filed an adversary complaint seeking to discharge his student loan as an undue hardship under section 523(a)(8). Both the debtor and the creditor, ECMC, filed motions for summary judgment. The bankruptcy court granted judgment in favor of the debtor and denied ECMC’s motion. ECMC appealed to the District Court for the Southern District of New York. Read More
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Eligibility for REPAYE Relevant Consideration for Student Loan Discharge
Posted by NCBRC - August 17th, 2021
The 51-year-old debtor with no mental or physical impairments, no dependents, and a history of underemployment, could not discharge her over $650,000 in student loans as undue hardship but must participate in the offered income-based repayment plan. Parvizi v. U.S. Dept. of Ed., No. 18-30578, Adv. Proc. No. 19-3003, 2021 WL 1921121 (Bankr. D. Mass. May 12, 2021), motion to amend judgment granted, July 28, 2021.
The pro se chapter 7 debtor entered bankruptcy with a student loan debt of over $650,000 which she sought to discharge as undue hardship under section 523(a)(8). She was 51-years-old, had no dependents, spoke four languages, and had no physical or mental impairments standing in the way of employment. She obtained multiple degrees including a medical degree though she never completed a medical residency. She described years of under-employment, most often in education. She made clear that so long as she could live comfortably, she sought employment for personal fulfillment rather than for maximizing her income. Though she could avail herself of an income-based repayment plan at a rate of $80/month, she chose not to, in part because she blamed the psychiatric residency program from which she voluntarily withdrew for failing to provide her with the education it promised. Read More
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Private Student Loan Not “Educational Benefit”
Posted by NCBRC - July 23rd, 2021
A private student loan is not a conditional grant and therefore does not fall within the meaning of section 523(a)(8)(A)(ii) which excepts from discharge an “educational benefit, scholarship, or stipend.” Homaidan v. Sallie Mae, Inc., No. 20-1981 (2d Cir. July 15, 2021).
The chapter 7 debtor received a bankruptcy discharge that was ambiguous as to whether it applied to the “Tuition Answer Loans” he obtained from Navient (as successor to Sallie Mae,Inc.) The loans, in the amount of $12,567, were paid directly into the debtor’s bank account, and exceeded the debtor’s tuition obligation. Post-discharge, Navient pursued repayment of the loans, and the debtor complied, ultimately paying them off. The debtor then reopened his bankruptcy and filed an adversary proceeding seeking an order holding Navient in contempt for violation of the discharge violation. The court determined that the loans had been discharged and denied Navient’s motion to dismiss. Homaidan v. SLM Corp. (In re Homaidan), 596 B.R. 86, 107 (Bankr. E.D.N.Y. 2019). The Second Circuit granted Navient’s petition for direct appeal. Read More
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Sanction Against Student Loan Servicer Exceeded Court’s Civil Contempt Power
Posted by NCBRC - June 23rd, 2021
The bankruptcy court’s contempt order against a student loan servicer requiring it to pay off the entire amount of the debtor’s student loan was punitive rather than compensatory or coercive and, therefore, the award exceeded the court’s civil contempt power. Great Lakes Educ. Loan Serv. Inc. v. Leary, No. 20-8050 (S.D.N.Y. June 22, 2021). Read More
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Scotus Punts Student Loan Case
Posted by NCBRC - June 21st, 2021
The Supreme Court today declined the opportunity to clarify the test for determining whether a debtor has met the undue hardship standard for purposes of student loan discharge under section 523(a)(8). McCoy v. United States, No. 20-886, pet’n denied, (June 21, 2021). The debtor/petitioner sought to reverse the Fifth Circuit’s application of the Brunner test under which that court found that the 62-year-old debtor, who had suffered a cascade of mental and physical catastrophes, failed to establish “total incapacity” to repay the debt in the future. In re McCoy, No. 19-40269 (5th Cir. June 5, 2020). The petition contrasted the Fifth Circuit’s Draconian test with the totality of circumstances test, under which the Eighth and the First Circuits consider whether the debtor’s “reasonable future financial resources will sufficiently cover payment of the student loan debt[] while still allowing for a minimal standard of living.” NACBA filed an amicus brief in support of the petitioner pointing out that a debtor’s chance of discharging a student loan was almost entirely dependent on what jurisdiction the debtor happened to live in. Unfortunately, the Supreme Court chose not to correct the anti-debtor stance the Fifth Circuit and other courts have adopted.
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Student Loan Guaranteed by TERI Was Nondischargeable
Posted by NCBRC - May 13th, 2021
The debtor’s student loan was “funded” by TERI, a nonprofit organization that guaranteed the loan, and was, therefore, nondischargeable under section 523(a)(8). Medina v. Nat’l Collegiate Student Loan Trust 2006-3, No. 20-1912 (S.D. Cal. April 20, 2021). Read More
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Reasonable Application of Brunner Test Supports Undue Hardship Discharge
Posted by NCBRC - March 27th, 2021
Where the fifty-seven-year-old debtor’s current income and anticipated future income would both be insufficient to pay even the interest on his student loans, his expenses were not excessive, and he acted in good faith, he was entitled to partial discharge under section 523(a)(8), and the bankruptcy court had leeway to determine which of his several loans to discharge. ECMC v. Goodvin, No. 20-1247 (D. Kan. March 17, 2021). Read More
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Court Applies Purpose Test to Private Student Loan Discharge Case
Posted by NCBRC - January 11th, 2021
Private loans extended for the purpose of paying the debtor’s “costs of attendance” at the University of Michigan and which, taken in conjunction with the debtor’s Pell Grants, did not exceed the debtor’s education expenses, fell within section 523(a)(8)(B)’s exception to discharge. MacEwan Conti v. Arrowood Indemnity Co., No. 20-1172 (6th Cir. Dec. 14, 2020). Read More
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