Legal News for Credit Union Managers Since 1990
« Credit Union Employee Policies
Discharge Denied: Joint Ownership of Assets »
04
Dec
2020

Nondischargeable Credit Union Student Loan

Here, the appellate court reversed a bankruptcy court ruling discharging Roberts’ student loans in a Chapter 7 bankruptcy.

Here, Roberts borrowed more than $25,000 of student loans from Equipment Federal Credit Union and attended Eastern Illinois University. Seven months after Roberts’ student loans became due, he filed bankruptcy and sought to discharge the credit union’s debts.

The bankruptcy court ruled that the loans would be discharged and the credit union appealed that order to the U.S. District Court.

On appeal, the bankruptcy court ruling was reversed and the credit union’s student loans were found to be non-dischargeable.

The Bankruptcy Code prescribes that student loans granted by nonprofit institutions will not be discharged in bankruptcy.

The appellate court noted that a previous court decision held a credit union was not a “nonprofit” institution and, therefore, did not fit within the Bankruptcy Code’s protection when issuing student loans.

The prior court decision found that credit unions were in competition with banks, which are profit corporations, and that credit unions should not be given more favorable treatment.

This appellate court noted, however, that credit unions are nonprofit corporations and do, in fact, qualify for protection from loss caused by the discharge in bankruptcy of a student loan.  Construction Equipment Federal Credit Union v. Mark Roberts, U.S. District Court, C.D. Illinois (No. 92-3228).

Author:  Charles R. Harroun, Attorney at Law



This entry was posted on Friday, December 4th, 2020 at 9:08 am and is filed under Bankruptcy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Leave a Reply

Your comment

Powered by WP Hashcash

  • Recently Posted Articles written by: Charels R. Harroun, Attorney at Law

    • Statement of Financial Affairs: Discharge Denied
    • Holder in Due Course – Checks
    • Reasonable Reliance on Debtor’s Loan Application
    • $100,000.00 Award to Employee
    • Chapter 13 Bankruptcy Home Equity Mortgage Modifications
    • Substantial Abuse: Bankruptcy Dismissed
    • Sale of Credit Union Collateral: “AS IS”
    • Mobile Home Lien Superior to Real Estate Mortgage
    • Deposit Set-Off Not Allowed
    • Credit Union Board-Member Suit Dismissed
    • Collateral: Embezzled Funds

  • Website Builder

2009-2020 Copyright Harroun, P.C. | Credit Union Legal Newsletter powered by WordPress and Uchilla
Subscribe: Entries (RSS) and Comments (RSS)