What Happens When Nondischargeable Student Loan Is Later Determined to Be Dischargeable?

The U.S. Bankruptcy appellate panel for the Ninth Circuit addressed a matter of first impression: what happens when a debt that may be considered nondischargeable is later determined to be dischargeable, and more importantly, whether efforts to collect such a debt be exempt from penalties for violating the discharge injunction?

8 minute read June 01, 2024 at 12:05 AM
By
Lawrence J. Kotler and Drew S. McGehrin
What Happens When Nondischargeable Student Loan Is Later Determined to Be Dischargeable?

One of the key aims of the bankruptcy process is affording debtors a "fresh start" by granting them a discharge of their debts, However, the Bankruptcy Code has excepted certain debts that are incapable of being discharged as a matter of right, including, without limitation, certain "qualifying" loans used to fund a debtor's education.

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