In Re Tyler

285 B.R. 635
CourtUnited States Bankruptcy Court, W.D. Texas
DecidedNovember 19, 2002
Docket19-30032
StatusPublished
Cited by6 cases

This text of 285 B.R. 635 (In Re Tyler) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Tyler, 285 B.R. 635 (Tex. 2002).

Opinion

MEMORANDUM OPINION

FRANK R. MONROE, Bankruptcy Judge.

This Court held a hearing on September 3, 2002 with regard to the Debtor’s Motion to Enforce Discharge. This Court has jurisdiction under 28 U.S.C. § 1334(a), (b) and (d), 28 U.S.C. § 151, 28 U.S.C. § 157(a) and (b)(1), and the Standing Order of Reference in this District. This is a core proceeding under 28 U.S.C. § 157(b)(2)(A) and (O) as it is a question of whether the Discharge Order entered in the case discharged the Debtor’s student loans, and is, therefore, a proceeding arising under Title 11. This Memorandum Opinion shall constitute Findings of Fact and Conclusions of Law as required by Bankruptcy Rule 7052 which is made applicable to contested matters under Bankruptcy Rule 9014.

Findings of Fact

Patrick H. Tyler (the “Debtor”) filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code on October 7, 1998. Listed as debts in his Chapter 13 were certain student loans owed to Educational Credit Management Corporation (“ECMC”). These loans were also provided for in Debtor’s Chapter 13 Plan. ECMC attempted to file a proof of claim in Debt- or’s bankruptcy, but such claim was untimely and therefore disallowed. Debtor completed his Chapter 13 plan payments and became entitled to a discharge. A Discharge Order was entered on May 31, 2001. The Discharge Order ordered that:

1. “Pursuant to 11 U.S.C. § 1328(a), the Debtor is discharged from all debts provided for by the plan or disallowed under 11 U.S.C. § 502, except any debt”:
(a) provided for under 11 U.S.C. § 1322(b)(5) and on which the last payment is due after the date on which the final payment under the plan was due;
(b) In the nature of alimony to, maintenance for or support of a spouse, former spouse, or child of the Debtor in connection with a separation agreement, divorce decree or other order of *638 a court of record, or property settlement agreement, as specified in 11 U.S.C. § 523(a)(5);
2. Pursuant to 11 U.S.C. § 1328(d), the Debtor is not discharged from any debt based on an allowed claim filed under 11 U.S.C. § 1305(a)(2) if prior approval by the Trustee of the Debtor’s incurring such debt was practicable and was not obtained.
3. Notwithstanding the provisions of Title 11, United States Code, the Debtor is not discharged from any debt made non-dischargeable by 18 U.S.C. § 3613(f) by certain provisions of Titles 10, 37,38, 42 and 50 of the United States Code, or by any other applicable provision of law.
4. All creditors are prohibited from attempting to collect any debt that has been discharged in this case.

This Discharge Order did not contain the language it should have excepting the Debtor’s student loans from discharge in accordance with then existing law as the Chapter 13 Trustee had neglected to change the form he was using. The Discharge Order was submitted and entered by the Bankruptcy Clerk pursuant to the Amended Standing Order Authorizing Clerk to Sign Certain Administrative Orders filed September 30, 1994. On May 29, 2001, notice of the Discharge Order was sent to Debtor’s creditors including ECMC. On August 15, 2001 the Bankruptcy Clerk closed the Debtor’s case.

ECMC initiated collection efforts on its student loan on or about September 12, 2001. Apparently, ECMC repeatedly called Debtor’s place of employment as well as his home and also mailed demands for payment and sent other documents to Debtor’s home. ECMC additionally intercepted and offset Debtor’s 2001 Federal Income Tax refund in the amount of $962.00. Debtor contacted ECMC to discuss the terms of the Discharge Order as well as telecopied this Order to ECMC. Debtor indicated to ECMC that his student loans were discharged as they were not specifically excepted from discharge in the Discharge Order. ECMC chose not to reopen the Debtor’s case to attempt to have the Order corrected under Rule 60. Instead, ECMC continued its collection efforts under the belief that it was not bound by the Order as it did not correctly recite the law then in effect with respect to student loans. The Debtor reopened his case and filed a Motion to Enforce Discharge Order when ECMC initiated garnishment of his wages. It has been more than one year since the entry of the Discharge Order.

At the time Debtor filed his Chapter 13 bankruptcy, § 1328(a)(2) of the Bankruptcy Code excepted from discharge student loan debts pursuant to § 523(a)(8) of the Bankruptcy Code. Section 523(a)(8) requires a Debtor to bring an adversary proceeding to attempt to discharge his student loans. There is no other way for a Debtor to discharge such loans in a bankruptcy case. The Discharge Order in this case, however, failed to except from discharge this Debtor’s student loan obligations pursuant to 11 U.S.C. § 1328(a)(2) as noted above due to the oversight of the Chapter 13 Trustee. Therefore, Debtor contends that the Discharge Order actually discharged his student loan obligations regardless of what the law provided.

Legal Issue

Are student loan obligations dischargeable regardless of the exception to dischargeability set forth in § 1328(a)(2) of the Bankruptcy Code where a Discharge Order by its terms does not specifically except them from being discharged?

*639 Conclusions of Law

The problem in this case arose because the standard form of Discharge Order used by the Chapter 13 Trustee for discharges did not reflect the state of the law as it applied to student loans when it was entered. Neither the Debtor nor ECMC dispute the contention that the Discharge Order was contrary to the law at the time it was entered.

As stated Debtor contends that the Discharge Order, because it did not specifically except the student loans from discharge, had the effect of discharging his student loan obligations.

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Related

New Jersey Higher Education Assistance Authority v. Pennell
871 A.2d 671 (New Jersey Superior Court App Division, 2005)
In Re: Craig D. Hanson, Debtor-Appellant
397 F.3d 482 (Seventh Circuit, 2005)
In Re Hanson
306 B.R. 241 (W.D. Wisconsin, 2003)

Cite This Page — Counsel Stack

Bluebook (online)
285 B.R. 635, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-tyler-txwb-2002.