Navient Loses Appeal of Bankruptcy Court’s Denial of its Motion to Compel Arbitration of Student Loan Dischargeability Issue

Navient Loses Appeal of Bankruptcy Court’s Denial of its Motion to Compel Arbitration of Student Loan Dischargeability Issue

Navient appeals a decision by the bankruptcy court denying its motion to compel arbitration on a loan it services between Debtor and Sallie Mae.

Debtor took out the loan in 2010 to finance her post-graduate bar examination. She never repaid it, and in 2016 filed a Chapter 7 bankruptcy case, scheduling the loan as a $20,751.15 unsecured claim. Debtor does not dispute the applicability or enforcement of an arbitration clause contained within the Note.  But she contends that because arbitration would address a core bankruptcy matter—whether the loan is a non-dischargeable education debt—the bankruptcy court has discretion to retain jurisdiction to resolve the matter.  The bankruptcy court agreed, denying Navient’s motion to compel arbitration and to dismiss or to stay the case pending arbitration. Navient appeals this decision.

Please note, in order to view NACBA Member Content, you must sign in and then visit NEWS. If you are not a NACBA member, you may Become a NACBA Member 

No Comments

Post a Comment