When Is A Discharge Proceeding For Student Loans Ripe In Chapter 13?...

http://www.georgiabankruptcyblog.com/files/2017/01/iStock_000027221274XS... 200w, http://www.georgiabankruptcyblog.com/files/2017/01/iStock_000027221274XS... 40w, http://www.georgiabankruptcyblog.com/files/2017/01/iStock_000027221274XS... 80w, http://www.georgiabankruptcyblog.com/files/2017/01/iStock_000027221274XS... 160w, http://www.georgiabankruptcyblog.com/files/2017/01/iStock_000027221274XS... 283w" sizes="(max-width: 100px) 100vw, 100px" />In In re Vines, Adv. Proc. No. 16-4045, 2017 WL 213806 (Bankr. N.D. Ga. January 18, 2017), the Chapter 13 debtor filed an adversary proceeding to discharge her student loan debt pursuant to 11 U.S.C. §523(a)(8).  The lender, Educational Credit Management Corporation, moved to dismiss, arguing that the matter was not ripe for adjudication until after the debtor completed her Chapter 13 plan payments.

Ripeness has two components: constitutional ripeness and prudential ripeness… The determination of constitutional ripeness “goes to whether the district court had subject matter jurisdiction to hear the case…” Even if a court has jurisdiction, prudential ripeness requires consideration of whether a court, in its discretion, should consider the matter at that time. Thus, courts must resolve “whether there is sufficient injury to meet Article III’s requirement of a case or controversy and, if so, whether the claim is sufficiently mature, and the issues sufficiently defined and concrete, to permit effective decision-making by the court.”

In a chapter 13 case, a debtor’s discharge is contingent on the completion of payments under the plan which often takes three to five years. Coupled with the forward-looking nature of
prong two of the undue hardship test, this suggests, but does not require, the conclusion that a determination of dischargeability is best made near the end of a chapter 13 case.

Ms. Vines has not filed a response to ECMC’s motion. In the absence of any showing by her that the Court should now proceed with determination of dischargeability, the Court will exercise its discretion to postpone the determination until completion of her chapter 13 plan payments.

(citations omitted).  As noted in the quote above, the debtor did not respond to the lender’s motion, so it is not clear whether the result would have been different had she filed a response with meritorious arguments.  I read Judge Bonapfel’s opinion as leaving that open for other cases, with the assumption that the proceeding would not be ripe until the completion of plan payments.

Scott Riddle’s practice focuses on bankruptcy and litigation. Scott has represented Chapter 7 and 11 debtors, creditors, creditor committees, trustees, court-appointed receivers and other interested parties in bankruptcy cases and bankruptcy litigation.  For more information, click here.