Legal Question in Bankruptcy in California

Student Loan claimed as non-dischargeable

I filed for Ch 13 bankruptcy in 4/94, then had to dismiss and refile in 10/95 due to a company closure. My case was discharged 10/00. During case, the judge disallowed the California Student Aid's claim in its entirety and no fees were paid to this creditor by the trustee. I have now received a demand for payment by a collection agency for the full amount of $11,534, plus interest that almost triples the original balance due. They claim my consolidation loan in 4/88 eliminated the 7 year exception and that non-dischargeable loans are allowed to accrue interest and penalties throughout the bankruptcy autostay. My attorney has since retired and I'm trying to determine if this claim is valid, if they can legally charge interest as stated, and whether or not I should try to reopen the case for undue hardship or ? I was laid off from my dotcom job in 12/00, am five months pregnant and working only part-time now and for well into the future. My husband's income cannot cover this new expense on my behalf. Any guidance/advice most welcome! If I should settle, can I dispute the interest/penalties? Thanks.


Asked on 4/28/01, 12:14 am

1 Answer from Attorneys
Mark Markus Law Office of Mark J. Markus

Re: Student Loan claimed as non-dischargeable

You indicate that the judge disallowed the claim of the student loan agency. If you have such an order from the court then I don't understand how the student loan agency can contest that now. I'm assuming you file a complaint against them in the bankruptcy case and went to trial and the judge found the debt to be nondischargeable? Or did you object to their claim as being not of the proper amount? Your facts seem to contradict themselves. If you are talking about the 7 year exception then that is a dischargeability issue and they are correct, the consolidation re-started the 7 year period. If you are mistaken and the court did not grant you a discharge of the student loan debt, then you could possibly reopen the ch. 13 case, or better still would be to file a new chapter 7 case to seek undue hardship, assuming that you meet the test for undue hardship and can afford the attorney's fees to litigate it.

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Answered on 6/18/01, 12:18 pm


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