Creativity in Chapter 13 – An Unsecured Creditor’s Dilemma [1]

By Alane A. Becket, Becket & Lee LLP, Malvern, PA

In United Student Aid Funds, Inc. v. Espinosa, 130 S. Ct. 1367 (2010), a debtor’s confirmed Chapter 13 plan provided for repayment of only principal on the debtor’s student loan debt, with accrued interest to be discharged once the debtor repaid the principal.  The Bankruptcy Court had confirmed Espinosa's plan with its student loan treatment, without an adversary proceeding and a finding of undue hardship.  Years after the plan was confirmed, the student loan creditor sought to collect the remainder of the debt to satisfy . . .

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