BCLP Global Restructuring & Insolvency Developments

Global Restructuring & Insolvency Developments

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Awkward: Old Friend From Church Blocks Discharge of Student Loan Debt

Providing an exception to the axiom that no good deed goes unpunished (a wonderful phrase courtesy of Clare Booth Luce, author, Ambassador, speaker, and a model for our times even thirty years after her death), a Texas bankruptcy court recently declared nondischargeable a debt owed to a guarantor who had been forced to pay the debtor’s defaulted student loan.

The case, De La Rosa v. Kelly  (Adv. Pro. No. 17-03320 (In re Kelly, Case No. 17-32295)) was resolved by the U.S. Bankruptcy Court for the Southern District of Texas by way of summary judgment on March 23, 2018. The debtor, Tabitha Renee Kelly, borrowed $6,292 from the Texas Higher Education Coordinating Board in 2002 to pay educational expenses. The plaintiff in the adversary proceeding, Mary

Bankruptcy Court Reluctantly Allows Creditor To Shuck “Lil’ Sweet Pea” Accounts

Any first-year law student could attest that understanding what the law is can be a difficult task, in part because the law is not always applied consistently by courts.  This problem gives rise to a maxim law professors often invoke (sometimes citing Justice Oliver Wendell Holmes, a proponent of this maxim) when questioned about the law’s occasional incoherence: “hard cases make bad law.”[1]  The idea is that courts are sometimes tempted to skirt the proper application of the law when the result seems harsh or unfair.  Typically, this happens when a court is faced with a particularly sympathetic party who happens to be on the wrong side of the dispute.  Although the court’s desire to avoid a harsh outcome is laudable, if the court allows this desire to distort its interpretation of the law it allows other (often less sympathetic) parties to avoid proper application of the law

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