Chelsea A. Conway v. National Collegiate Trust (In re Conway)

In re Conway, 8th Cir. B.A.P. No. 13-6016 (August 21, 2013)
Reversed: The 8th Circuit Bankruptcy Appellate Panel, after a de novo review, reversed the U.S. Bankruptcy Court for the Eastern District of Missouri's ruling, that Ms. Conway's private loans were not dischargeable in her chapter 7 case, on the grounds that excepting all of the obligations to NCT from discharge would be an undue hardship. The court found undue hardship because Ms. Conway’s past, present, and reasonably reliable future financial resources are not sufficient to meet all of the monthly payment obligations to NCT while maintaining a minimum standard of living.
Procedural context:
The Plaintiff, Chelsea Conway, appealed the decision of the bankruptcy court finding her student loan obligations to National Collegiate Trust (“NCT”) and First Marblehead Corp., Inc. to be nondischargeable.
On December 7, 2009, Ms. Conway filed for Chapter 7 bankruptcy protection and received a discharge on March 16, 2010. On December 16, 2011, Ms. Conway filed a motion to reopen her case, which motion was granted on December 20, 2011. On January 24, 2012, Ms. Conway filed an adversary proceeding against NCT pursuant to 11 U.S.C. § 523(a)(8) for the purpose of determining dischargeability of her student loans. From October 21, 2003, through September 2006, Ms. Conway entered into 15 separate student loan notes with NCT. All 15 notes are educational loans as defined in 11 U.S.C. § 523(a)(8) and were incurred for higher education expenses. The total original balance of all 15 loans was $70,100.00. As of November 5, 2012, the total balance owed, with interest, was $118,579.66. The interest rates on the 15 student loans range from 3.25% to 5.150%. Ms. Conway had additional student loan obligations to Key Bank, N.A. in the amount of $9,000.00, and Sallie Mae/SLM Corp. in the amount of $11,000.00, both of which were discharged pursuant to stipulations and bankruptcy court orders approving the stipulations. Ms. Conway also has federally-guaranteed student loans of approximately $18,000.00 that are not part of this proceeding because these federal loans are consolidated and are being paid through the Income Contingent Repayment Plan available under the William D. Ford Federal Direct Student Loan Program. There is no income contingent repayment program is available for the private student loans at issue in this case and NCT does not suggest that any similar program available for its loans.
Bankruptcy Judges: Kressel, Saladino and Schodeen

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