In re Pracht, 464 B.R. 486, 490–92 (Bankr. M.D. Ga. 2012) (Smith)

Not unfair discrimination to separately classify student loan for continuing payments that will total $30,330.84 when other unsecured claims will receive only $15,660; continuing payment of student loan will permit debtor to realize loan forgiveness of approximately $50,000. Debtor was a school teacher with student loans totaling $115,934.98. Debtor was eligible for “public service loan forgiveness” program. If debtor made 120 consecutive monthly payments at a negotiated amount, balance remaining of approximately $50,000 would be forgiven. Plan proposed to separately classify the student loan debt for payment of $532.12 per month. Level payment of all unsecureds would increase distribution to general unsecured creditors by approximately $5,000. “[S]ection 1322(b)(5) does not ‘trump’ (b)(1). Rather, payments on a long-term debt under (b)(5) will not be permissible if the payments discriminate unfairly against the other unsecured claims in violation of (b)(1). . . . The Eleventh Circuit has not addressed the standards to be applied in determining whether a plan ‘discriminates unfairly’. . . . [T]his Court can find no compelling reason why it should accept or reject any one of the many tests which have been developed by other courts. . . . [T]his determination must be made in light of the purposes of the Bankruptcy Code. . . . [A]llowing the debtor to separately classify and pay the student loan debt more than the other unsecured claims will allow the debtor to participate in the Public Service Loan Forgiveness program and thereby give her the chance to write off approximately $50,000 of the debt which would otherwise remain nondischargeable. Accordingly, allowing her to discriminate in favor of the student loan debt advances the goal of the debtor’s fresh start. . . . [T]he cost of this discrimination to the creditors holding the other unsecured claims is the difference between a 15 percent and 20 percent distribution, or a total of only approximately $5,000. . . . [I]n light of this small cost to the creditors holding the other unsecured claims, allowing the debtor to proceed as proposed is a fair balance of the goals of the Bankruptcy Code.”

No Author Biography has been linked to this Article.

Related Articles

November 22, 2020
By David Cox,1 Cox Law Group, PLLC (Lynchburg, VA) III. Providing for the Secured Mortgage Claim, as Modified. A. Does the requirement of § 1325(a)(5)(B)(iii) for equal monthly payments permit the Debtor to propose a balloon payment in the payment of the creditor’s claim? Equal Monthly Payments Required By § 1325(a)(5)(B)(iii) Does NOT Permit Debtor To Propose A Balloon Payment....
Members
July 7, 2019
By Robert B. Branson and Tammy Branson, Branson Law PLLC (Orlando, FL) On June 10, 2019, Chief Judge Michael Williamson entered Administrative Order 2019-1 Prescribing Procedures for Student Loan Modification Program “SLP” in the Middle District of Florida, which goes into effect August 1, 2019. The SLP Program was a district-wide effort created with input from all three divisions of...
Members
August 9, 2020
By Lawrence R. Ahern III, Brown & Ahern (Nashville, TN) Introduction to this Series Current pandemic circumstances and economic conditions portend an onslaught of bankruptcy filings. In the consumer bankruptcy field, trustees and debtors' counsel often are uncomfortable with the rules in UCC Article 9. Here, we look at a couple of topics that touch on the interplay of Article...
Members
William-1_print_2019
“We have observed consumers who seem to be focused principally on their credit scores, . . . rather than focusing on . . . a more critical immediate focus on their balance sheets . . .”
Members
memorialday
May 28, 2023
Memorial Day 2023 Honoring the Sacrifices of All Who Served
March 17, 2019
By Wm. Houston Brown, United States Bankruptcy Judge (Retired) Confirmation - Trustee’s “double-dipping” objection to above-median confirmation denied. The trustee objected to confirmation based on above-median debtor deducting the IRS Local Standard housing deduction when the actual mortgage expense was on a marital residence owned by the debtor’s nonfiling spouse, while also claiming the marital adjustment for the spouse’s income...
Members
April 18, 2021
By Herbert L. Beskin, Chapter 13 Standing Trustee for the Western District of Virginia (Charlottesville) If you’re looking for a well-written and clear appellate opinion about a much-litigated topic, with a bit of ancient mythology thrown in for good measure, this HUD’s for you. The case is Wood v. U.S. Dept. of Housing & Urban Development (In re Larry and...
Members
Copy of Hildebrand-2016
December 4, 2022
Chapter 13 plan which provided a specific amount to be cured on a reverse mortgage under § 1322(b)(5) would be controlled by the specific term of the plan provision and not by the larger proof of claim filed by the creditor. (Baer) In re Edelstein, 2022 WL 16730027 (Bankr. N.D. Ill. November 7, 2022) Case Summary The Edelsteins filed Chapter...
Members
July 25, 2021
By Henry E. Hildebrand, III, Chapter 13 Standing Trustee (Nashville, TN) Are private educational student loans automatically excepted from discharge by § 523(a)(8). (Jacobs) Homaidan v. Sallie Mae, Inc., Navient Solutions, LLC, 2021 WL 2964217 (2nd Cir. July 15, 2021) Case Summary Hilal Homaidan received a number of educational loans to attend College. Shortly after graduation, he filed a Chapter...
Members
beskin
October 22, 2023
Upon this auspicious occasion, seeing before us this eloquence of attorneys, let us recount the mighty deeds of one Herbert Lee Beskin. WHEREAS, Herbert was born and began his legal career in the last century (or we presume); and WHEREAS, a double Hoo, Herbert graduated from the University of Virginia with a B.A. in 1972, and stayed in Charlottesville to...