A weekly news service that publishes case summaries of the most recent important bankruptcy-law decisions, tracks major commercial bankruptcies, and reports on developments in bankruptcy reform in...
By Diane Davis
Nov. 7 — A financial agreement between a student and an educational institution isn’t a student loan and, as a result, the student can discharge the debt in her bankruptcy case ( D’Youville Coll. v. Tucker (In re Tucker) , 2016 BL 364391, Bankr. W.D.N.Y., No. 16-1001 K, 11/1/16 ).
Judge Michael J. Kaplan of the U.S. Bankruptcy Court for the Western District of New York Nov. 1 concluded that because the debt wasn’t “an education benefit overpayment or a loan,” the exception to discharge under Bankruptcy Code Section 523(a)(8)(A)(ii) doesn’t apply.
The court granted summary judgment to debtor Jetaun Tucker and discharged her debt to D’Youville College in Buffalo, N.Y.
The financial agreement entered into between the parties was “no more than an agreement to pay for tuition, fees and other registration costs (whatever they turn out to be), at some unspecified future time, and not for an ‘educational benefit overpayment or loan’ as contemplated in §523(a)(8)(A)(i), the court said.
This case is similar to two other recent cases in the Western District of New York, with the exception that in this one, there was no promissory note signed by the debtor, the court said, citing In re Hardy, 535 B.R. 528 (Bankr. W.D.N.Y. 2015), but see In re Girdlestone, 525 B.R. 208 (Bankr. W.D.N.Y. 2015), where an obligation to pay qualified as an educational loan.
Exceptions to discharge under the Bankruptcy Code are construed narrowly and a creditor must prove by a preponderance of the evidence that its claim falls within one of those exceptions, the court said.
D’Youville argued that the financial agreement entered into between the parties provided all the required terms of a loan and met the conditions of Cazenovia College v. Renshaw, 222 F.3d 82 (2d Cir. 2000).
The court disagreed because it didn’t find a specific amount due in the financial agreement. The agreement contained a monthly interest provision and indicated that an adjustment would be made for financial aid received at a later time. The financial agreement between the parties was “nothing more than a running account,” the court said.
Given the fact that no funds were received by the debtor, Section 523(a)(8)(A)(ii) doesn’t apply, the court said.
Thomas Denny, Law Office of Thomas Denny, Amherst, N.Y., represented debtor Jetaun Tucker; R. Thomas Burgasser, North Tonawanda, N.Y., represented plaintiff D’Youville College; Chapter 7 trustee John H. Ring, III, Orchard Park, N.Y.
To contact the reporter on this story: Diane Davis in Washington, D.C. at DDavis@bna.com
To contact the editor responsible for this story: Jay Horowitz at JHorowitz@bna.com
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)