Search by Case Name
Search by Case Number
Search by Keyword

#2321 signed 5-16-97

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF KANSAS




In re:

MICHAEL STEVEN CARLISLE,

DEBTOR(S).





CASE NO. 92-40012-13

CHAPTER 13





ORDER DENYING REQUEST FOR AN ORDER TO SHOW CAUSE,

BUT DIRECTING TRUSTEE TO PROVIDE INFORMATION TO PARTIES


This matter is before the Court on the debtor's "Accusation in Contempt" against the University of Kansas (KU), a creditor to whom he owed a student loan debt before he filed a chapter 13 bankruptcy. The debtor appears by counsel Michael Brunton. KU appears by counsel Rose Marino. The Court has reviewed the relevant pleadings and is now ready to rule.

Through his chapter 13 plan, the debtor paid all the principal and prepetition interest he owed on his debt to KU. He completed his plan and an order granting his discharge was entered on January 16, 1997. Thereafter, KU contacted him seeking to collect interest that accrued on the debt after he filed for bankruptcy. Believing this action violated the discharge injunction imposed by 11 U.S.C.A. §524(a), the debtor filed his "Accusation in Contempt," asking the Court to require KU to show cause why it should not be held in contempt for renewing its collection efforts. In response, KU concedes it is seeking to recover postpetition interest from the debtor and contends it is allowed to do so because the student loan debt was nondischargeable under §1328(a)(2).

Initially, the Court was inclined to agree with the debtor that KU's collection efforts were not permissible. However, the clear majority--in fact, all but one--of the reported decisions dealing with this question have agreed with KU's position. See, e.g., Leeper v. Pennsylvania Higher Educ. Assistance Agency, 49 F.3d 98 (3d Cir. 1995) (citing numerous cases); Wagner v. Ohio Student Loan Comm'n (In re Wagner), 200 B.R. 160 (Bankr.N.D.Ohio 1996). Contra, In re Wasson, 152 B.R. 639 (Bankr. D.N.M. 1993). The Tenth Circuit has apparently never addressed the question, and the Court is not willing to cite KU in contempt for relying on the majority view. Indeed, the Court has become convinced that the majority view, as expressed in Leeper and Wagner, correctly interprets the applicable Bankruptcy Code provisions. Postpetition interest on a claim is not allowed against the bankruptcy estate because of §502(b)(2), but such interest continues to accrue against the debtor personally on nondischargeable debts, and can be collected from the debtor once the automatic stay has terminated, even though the debtor paid the principal amount of the debt under a chapter 13 plan and received a discharge.

The Court does believe the debtor is entitled to have his plan payments credited toward the principal amount of the debt as of the date the chapter 13 trustee received each payment, rather than when the trustee distributed the money to KU. In chapter 13 cases, the trustee acts as the collecting agent for the debtor's creditors, so postpetition interest should stop accruing against the debtor when he pays that agent. The trustee is directed to provide the debtor and KU with the information necessary to give effect to this ruling.

IT IS SO ORDERED.

Dated at Topeka, Kansas, this _____ day of May, 1997.













__________________________________

JAMES A. PUSATERI

CHIEF BANKRUPTCY JUDGE

 

Search by Case Name
Search by Case Number
Search by Keyword