Bankruptcy Court Reopens 1995 Case in order to Decide Pre-1998 Student Loan Discharge Case Under 7-Year Repayment Rule

Bankruptcy Court Reopens 1995 Case in order to Decide Pre-1998 Student Loan Discharge Case Under 7-Year Repayment Rule

This bankruptcy case was reopened to allow Plaintiff/Debtor  to bring this adversary proceeding which seeks a declaration of dischargeability of her student loans pursuant to the 1995 version of 11 U.S.C. § 523(a)(8)(A) that was in effect at the time the bankruptcy case was filed.  Educational Credit Management Corporation (“ECMC”) answered. Following discovery, Plaintiff moved for summary judgment, which ECMC opposes. ECMC asserts that there are disputed issues of fact as to both (i) the maturity date of Plaintiff’s loans and (ii) the repayment suspension periods. The matter is now before the court for decision.

Debtors  filed a joint chapter 7 petition on October 10, 1995. Included as debts listed on their schedules were certain educational loans taken out by the Plaintiff which have since been assigned to ECMC. Plaintiff received a discharge and the case was closed. Attempts to collect on the educational loans continued. Twenty years later the casewas reopened for the filing of this adversary proceeding in which Plaintiff seeks declaratory relief that the student loan debts at issue were encompassed by her discharge.

Plaintiff’s brief statement of material facts states October 10, 1995 as the date Debtor filed for bankruptcy and that Debtor listed the Student Loans on her schedules. ECMC does not contest these facts, but notes Debtor’s counsel’s failure to cite to the record to support her statements and Debtor-counsel’s inappropriate recitation of legal conclusions. Plaintiff’s SOF is deficient in this regard in failing to “cit[e] to particular parts of materials in the record,” as required by Federal Rule of Bankruptcy Procedure 7056. Furthermore, Debtor’s SOF fails to address a critical element of her claim—the date that Plaintiff’s Student Loans became due.

1. Documents and Testimony Relied Upon by Plaintiff3

Debtor began attending a doctoral degree program at Syracuse University (“SU”) in the fall of 1982. To pay for her studies, Debtor incurred the Student Loans. Debtor’s Student Loans include: (i) a $5,000 note dated November 22, 1982, (ii) a $2,896 note dated November 8, 1983, (iii) a $5,000 note dated June 20, 1984, and (iv) a $2,104 note dated August 7, 1984. Selbach Decl. Ex. C. Each promissory note similarly provides that the note becomes due and payable after the expiration of a nine-month grace period that begins when the debtor leaves school or ceases to be enrolled on at least a half-time basis.4 Id. Debtor testified that when the grace period expired following completion of her courses in August of 1985, she made payments on her loans without any interruption for any deferment or forbearance until the filing of her bankruptcy petition. Plaintiff’s evidence on this point is limited to the Debtor’s self-serving testimony.

Through the testimony of an Assistant Registrar at SU, the Debtor’s transcript is before the court. It reflects that Debtor maintained a course load of between six and twelve credit hours through the spring semester of 1985. At that point, Debtor took no further classes but was enrolled for nine dissertation credit hours (“Dissertation,” EDU999) in the summer semester of 1985. Debtor’s transcript reflects no course enrollment or dissertation hours in the fall of 1985. Thereafter, Debtor’s transcript reflects nine noncontiguous semesters, earning no credits, in which Debtor was either enrolled in the same Dissertation course or a “Degree in Progress,” with fall of 1995 noted as the last semester. Debtor was awarded a Doctor of Philosophy in the spring of 1996.

The SU Assistant Registrar also testified to the apparently sole Enrollment Certification in the Debtor’s file covering the spring 1987 term. SU’s criteria for full-time enrollment is defined as any one of the following: (1) registration for twelve credit hours, (2) registration for nine credit hours with appointment as a graduate assistant, or (3) upon recommendation of an academic unit due to exam study, completion of language requirements, or work on a thesis or dissertation. Corbett Aff. Ex. B. The Enrollment Certification confirms Debtor’s full-time student status for the spring semester of 1987 by virtue of work on her thesis or dissertation. Id. The Registrar’s office, however, in referencing Debtor’s file did not address any deferment or forbearance granted Debtor of her Student Loans, nor would it necessarily have any knowledge of the same.

Based upon its records, SU considered Debtor to be a full-time student for four semesters, a half-time student for five semesters, and a less-than-half-time student for eight semesters.

2. Documents and Testimony Relied on by ECMC

To establish that there were deferments, ECMC relies on a number of documents including the Pre-claim Form and the NYHESC letter of August 2006 . The Pre-claim Form notes Debtor as the borrower on a Stafford Loan in the amount of $5,818.94. It states delinquency on that loan as the reason for the Plaintiff’s requested deferment. Also noted on the Pre-claim Form is a prior deferment or forbearance from September 1, 1985 through May 1, 1988.

The NYHESC letter of August 2006 states that a request had been made to student loan services to produce documentation relating to two deferments: (1) a hardship deferment beginning on March 1, 1989 for nine months and (2) a second hardship deferment beginning on February 8, 1992 for nine months.

Also introduced as part of the business records maintained by NYHESC on the Plaintiff’s account were documents originating from NYHESC and AFSA, the servicer of the Student Loans. Decl. Brennan Exs. 1-4. The AFSA fax was received in response to NYHESC’s request for deferment and forbearance information. It notes a student deferment in favor of Julia Tinklepaugh-Biegler6 from September of 1985 through May of 1988 that was referenced in the Pre-claim Form and references a forbearance from February 1992 through October 1992. The NYHESC letter of November 2004 refers to the AFSA fax and indicates that the underlying deferment documentation would be forthcoming. The NYHESC letter of February 2008 references the student deferment and forbearance, calculating the due date of the loans as February 29, 1988, which was then extended by forty-two months of deferments. The NYHESC letter of December 2008 reviews the Debtor’s enrollment history, deferments, and forbearances to calculate a due date of February 1, 1988, which—after extension by deferments and forbearances—would result in the Student Loans having been in repayment status for seven years as of November 11, 1995, a date after the Debtors filed their petition in bankruptcy.

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