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.”

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