U.S. Department of Education v. Carlos Carrion, Jr. (In re Carrion, Jr.)

Case Type:
Case Status:
Reversed and Remanded
No. SC-18-1234-FBKu (9th Circuit, May 31,2019) Published
Bankruptcy court misapplied California law. Debtor remained liable for the entire amount of his own educational loan debt even though he agreed to a 50-50 division of the debt with his ex-wife in their marital settlement agreement.
Procedural context:
Debtor filed a joint chapter 7 bankruptcy petition with his wife. They scheduled the educational loan debt owed to the Department of Education and indicated that the debt belonged to Debtor (husband). Debtor and his wife finalized their divorce. When the educational loan became due, Debtor denied that he owed the debt and filed a police report, claiming that he was a victim of theft and fraud. Debtor alleged that his ex-wife perpetrated the fraud and submitted the loan application without his knowledge. Bankruptcy court found Debtor's claim unpersuasive. Bankruptcy court concluded that Debtor was liable for one-half of the educational loan.
Debtor's son intended to enroll at a university. Debtor purportedly applied for a Federal Direct PLUS Loan. The Department of Education processed the loan and disbursed $21,894 to a university to cover the tuition costs of debtor's son.
Faris, Brand, Kurtz

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