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Rumer v. Am. Educ. Servs. (In re Rumer)
OPINION TEXT STARTS HERE
Sara A. Austin, Austin Law Firm LLC, York, PA, for Plaintiffs.
Kathryn Evans Perkins, Klehr Harrison Harvey Branzburg, Philadelphia, PA, Kimberly A. Bonner, James Smith Dietterick and Connelly LLP, Hershey, PA, Keri P. Ebeck, Weltman, Weinberg & Reis, LPA, Pittsburgh, PA, John P. Neblett, Reager and Adler, PC, Camp Hill, PA, Wesley Paul Page, United States Attorney's Office, Harrisburg, PA, for Defendants.
Citibank NA, Boston, MA, pro se.
PA Dept. of Education, Harrisburg, PA, pro se.
Jared and Elizabeth Rumer (“Debtors”) filed their bankruptcy petition and included on their schedule of creditors holding unsecured nonpriority claims fourteen claims related to student loan debt. Debtors now allege that the loans upon which the claims arose are not “qualified educational loans” and thus, are subject to discharge under 11 U.S.C. § 1328(a). Alternatively, Debtors argue that excepting the loans from discharge under 11 U.S.C. § 523(a)(8) will impose an undue hardship on Debtors and their dependent child.
Before me are motions for summary judgment filed by three of the answering Defendants: Loan Science (“Loan Science”) as servicer for Affiliated Computer Services (“ACS”); JP Morgan Chase (“Chase”); and the United States Department of Education (the “USDE”). These Defendants seek entry of judgment: (1) that their loans are “educational loans” within the purview of § 523(a)(8), and (2) that repayment of their loans will not be an “undue hardship” for Debtors. Debtors have filed a motion for summary judgment on the same issues against the following defendants: The Educational Resource Institute (“TERI”) as assignee of PNC Bank; Keybank, National Collegiate Trust (“NCT”); and Chase (collectively “Summary Judgment Respondents”). For the reasons discussed below, Debtors' motion for summary judgment will be denied, and the motions of Loan Science, Chase, and the USDE will be granted in part and denied in part.
On April 30, 2010, Debtors filed a bankruptcy petition under Chapter 13 and scheduled $456,221 in unsecured student loans. On April 12, 2011, Debtors filed the above-captioned complaint requesting the Court to determine that their student loans were subject to discharge. The following entities filed answers to the complaint: Keybank, Loan Science, Chase, National Collegiate Trust (“NCT”), the USDE, TERI, and Educational Credit Management Corporation (“ECMC”) as the assignee of two named Defendants—the Pennsylvania Higher Education Assistance Agency (“PHEAA”) and the California Student Aid Commission (“CSAC”).1 On May 12, 2011, Debtors and Sallie Mae filed a Stipulation in which they agreed that Sallie Mae's claim in the amount of $885.50 was dischargeable.
A. Debtors' educational loans and expenses
On May 20, 2010, Debtors filed their schedule of creditors holding unsecured nonpriority claims, identifying the following claims as “student loans”:
+---------------------------------------------------------------------------+ ¦Creditor ¦Incurred by ¦Date claim incurred ¦Amount ¦ +----------------------+---------------------+---------------------+--------¦ ¦ ¦ ¦ ¦ ¦ +----------------------+---------------------+---------------------+--------¦ ¦ACS/CLC Trust II ¦Husband ¦2006 ¦$ 3,313 ¦ +----------------------+---------------------+---------------------+--------¦ ¦AES ¦Wife ¦2005 ¦$ 3,312 ¦ +----------------------+---------------------+---------------------+--------¦ ¦AES ¦Husband ¦2001–02 ¦$ 5,002 ¦ +----------------------+---------------------+---------------------+--------¦ ¦AES/Keybank ¦Wife ¦2004 ¦$ 16,551¦ +----------------------+---------------------+---------------------+--------¦ ¦AES/NCT ¦Wife ¦2004–06 ¦$ 81,300¦ +----------------------+---------------------+---------------------+--------¦ ¦AES/NCT ¦Husband ¦2006 ¦$ 35,490¦ +----------------------+---------------------+---------------------+--------¦ ¦AES/PHEAA ¦Husband ¦2004–07 ¦$ 27,000¦ +----------------------+---------------------+---------------------+--------¦ ¦AES/PNC ¦Husband ¦[No date provided] ¦$ 23,798¦ +----------------------+---------------------+---------------------+--------¦ ¦AES/US Nat'l Bank ¦Wife ¦2002 and 2004 ¦$ 3,816 ¦ +----------------------+---------------------+---------------------+--------¦ ¦Chase ¦Husband ¦2007 ¦$ 26,364¦ +----------------------+---------------------+---------------------+--------¦ ¦Education Finance ¦Joint ¦2006 ¦$176,046¦ ¦Partner 2 ¦ ¦ ¦ ¦ +----------------------+---------------------+---------------------+--------¦ ¦Sallie Mae ¦Wife ¦2004–09 ¦$ 40,000¦ +----------------------+---------------------+---------------------+--------¦ ¦Sallie Mae ¦Husband ¦2003–07 ¦$ 9,611 ¦ +----------------------+---------------------+---------------------+--------¦ ¦SLC Conduit ¦Husband ¦2007 ¦$ 4,618 ¦ +----------------------+---------------------+---------------------+--------¦ ¦ ¦ ¦TOTAL ¦$456,221¦ +---------------------------------------------------------------------------+
Of the total debt reported on Debtors' schedules, $135,196 is attributable to educational loans for Jared Rumer (“Jared”) and $144,979 is attributable to educational loans for Elizabeth Rumer (“Elizabeth”). Debtors also reported joint educational loan debt of $176,046.
The amount of debt attributable to educational loans as reported in Debtors' schedules is similar to the total amount included in the proofs of claims filed in the case. However, the current holders of these obligations are not identical to the creditors reported on Debtors' schedule of non-priority unsecured creditors. Lenders and assignees who have filed proofs of claims for student loan debt are as follows:
+---------------------------------------------------------------------------+ ¦Creditor ¦Assignor ¦Incurred by ¦Amount ¦ +---------------------+--------------------+--------------------+-----------¦ ¦ ¦ ¦ ¦ ¦ +---------------------+--------------------+--------------------+-----------¦ ¦ECMC ¦Citibank NA ¦Jared ¦$ 4,645.71 ¦ +---------------------+--------------------+--------------------+-----------¦ ¦Chase ¦N/A ¦Both Debtors ¦$ 26,300.27¦ +---------------------+--------------------+--------------------+-----------¦ ¦Loan Science ¦N/A ¦Jared ¦$178,873.81¦ +---------------------+--------------------+--------------------+-----------¦ ¦Keybank ¦N/A ¦Elizabeth ¦$ 6,591.43 ¦ +---------------------+--------------------+--------------------+-----------¦ ¦Keybank ¦N/A ¦Elizabeth ¦$ 9,977.44 ¦ +---------------------+--------------------+--------------------+-----------¦ ¦Keybank ¦N/A ¦Elizabeth ¦$ 6,711.78 ¦ +---------------------+--------------------+--------------------+-----------¦ ¦ECMC (CLC) ¦CSAC ¦Elizabeth ¦$ 3,531.57 ¦ +---------------------+--------------------+--------------------+-----------¦ ¦ECMC ¦PNC(AES/PHEAA) ¦Elizabeth ¦$ 3,771.62 ¦ +---------------------+--------------------+--------------------+-----------¦ ¦ECMC ¦AES/PHEAA ¦Elizabeth ¦$ 3,855.30 ¦ +---------------------+--------------------+--------------------+-----------¦ ¦Sallie Mae/USAF 3 ¦N/A ¦Jared ¦$ 8,773.98 ¦ +---------------------+--------------------+--------------------+-----------¦ ¦Sallie Mae/USAF ¦N/A ¦Elizabeth ¦$ 7,044.51 ¦ +---------------------+--------------------+--------------------+-----------¦ ¦Sallie Mae/USAF ¦N/A ¦Elizabeth ¦$ 3,984.92 ¦ +---------------------+--------------------+--------------------+-----------¦ ¦Sallie Mae/USAF ¦N/A ¦Elizabeth ¦$ 11,261.71¦ +---------------------+--------------------+--------------------+-----------¦ ¦National Collegiate ¦N/A ¦Both Debtors ¦$118,690.94¦ ¦Trust ¦ ¦ ¦ ¦ +---------------------+--------------------+--------------------+-----------¦ ¦(First Marblehead ¦ ¦ ¦ ¦ ¦Corp.) ¦ ¦ ¦ ¦...
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