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#2285 signed 11-27-96

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF KANSAS

In Re:

PAMELA D. MYLES,

DEBTOR(S)

NO. 96-41973-13

CHAPTER 13

PAMELA D. MYLES,

PLAINTIFF(S),

v.

U.S. DEPARTMENT OF EDUCATION,

MISSISSIPPI GUARANTEED STUDENT LOAN AGENCY,

BOARD OF TRUSTEES OF STATE OF HIGHER LEARNING, INST.

DEFENDANT(S)

ADV. NO. 96-7103

JUDGMENT

This proceeding is before the Court following receipt of a proposed journal entry of judgment, submitted by the plaintiff-debtor's counsel, Craig J. Altenhofen of Harper, Hornbaker, Altenhofen & Opat of Junction City, Kansas. The Court believes the proposed journal entry does not accurately explain what has happened in this proceeding and misstates the relief now available to the debtor. Consequently, the Court will not sign the proposal and will enter this judgment instead.

The debtor commenced this proceeding to obtain a discharge of student loan debt she believed she owed the defendants. She alleged the debt first became due more than seven years before she filed for bankruptcy and is therefore dischargeable under 11 U.S.C.A. §523(a)(8)(A). Although the complaint named the U.S. Department of Education as a defendant, the United States filed a motion to dismiss in lieu of an answer, stating that the Department of Education had no record that the debtor owed it a student loan debt, and indicating that department cannot be sued. Later, the government and the debtor submitted an agreed order of dismissal in which the government conceded the debtor did not owe it any student loan debt.

In the meantime, the debtor submitted her proposed journal entry of judgment. Her counsel attached a copy of a letter he received from a company called USA Group, Inc., which states: (1) the company services bankruptcy claims for United Student Aid Funds, Inc., the designated student loan guarantor for the State of Mississippi as of September 1994; and (2) the Mississippi Guaranteed Student Loan Agency no longer exists. The letter goes on to indicate the debtor's loan "has been in repayment" for seven years, so no answer to the complaint will be filed, and asks for a copy of the chapter 7 discharge order when the case is completed.

The debtor's judgment says, "[T]he Court finds that an answer was not filed herein and judgment should be granted in favor of the Debtor/Plaintiff on her Petition and that the indebtedness of the Debtor/Plaintiff to the Defendants should be discharged." Apparently the judgment was submitted before the United States filed its motion to dismiss and was dismissed from the case, because no mention of these facts is included. More importantly, the judgment does not indicate that the debtor is not yet entitled to a discharge of any of her debts. Pursuant to 11 U.S.C.A. §1328(a), the debtor must complete her plan payments before she will be discharged. That has not yet happened. Under certain circumstances, she might be able to obtain an earlier discharge under §1328(b), but she has not yet sought such relief. Since her student loan debt first became due more than seven years before she filed for bankruptcy, it would be discharged under either of these provisions, which both incorporate §523(a)(8)(A).

Consequently, judgment is hereby entered declaring that defendants Mississippi Guaranteed Student Loan Agency (and its apparent successor United Student Aid Funds, Inc.), and Board of Trustees of State Institutions of Higher Learning are in default for failing to answer the plaintiff-debtor's complaint, and that the plaintiff-debtor's student loan debt will be discharged if and when she receives a discharge under §1328(a) or (b).

IT IS SO ORDERED.

Dated at Topeka, Kansas, this _____ day of November, 1996.













__________________________________

JAMES A. PUSATERI

CHIEF BANKRUPTCY JUDGE

 

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