Anthony Jeremy Eriksen
The court incorporates by reference in this paragraph and adopts as the findings and orders of this court the document set forth below. This document has been entered electronically in the record of the United States Bankruptcy Court for the Northern District of Ohio.
Dated: December 29 2022
Mary
United States Bankruptcy Judge
ORDER
This matter came before the court for hearing on December 19, 2022, on Debtor‘s Objection to Claim No. 1 filed by Navient Solutions, LLC on behalf of the United States Department of Education Loan Services (“DOE“). [Doc. # 37]. Participating by telephonе at the hearing were attorneys for the Debtor and DOE, as well as the Chapter 7 Trustee.
Debtor objects to DOE‘s claim in this case, which is Claim No. 1 on the Claims Register in the amount оf $13,832.77. Debtor asks that the claim be denied or, in the alternative, that distribution on the claim by the Trustee be held in abeyance until the issue of student debt forgiveness programs is resolvеd in the United States courts. Both DOE and the Trustee oppose Debtor‘s objection, DOE on the basis that it is a claim for a debt that was owed when the case was filed and that is оwed at this time and the Trustee on the same basis, plus that it would be unfair to other creditors to hold open administration of this case indeterminately to await the uncertain outcome of litigation over student loan forgiveness programs.
The district court has jurisdiction over this Chapter 7 case under
Debtor submits that a one-time federal student loan debt relief program announced by President Biden in August 2022 applies to the DOE claim and is a basis under the law to disallow it. It is undisputed that Debtоr applied for the federal student loan debt relief plan on October 18, 2022. Debtor argues that if the debt is forgiven, it would no longer be a debt subject to distribution from the estatе by the Trustee in accordance with the claim. It is also undisputed that the student loan forgiveness program is the subject of ongoing litigation and that issues therein will be heard by the United States Supreme Court in 2023.
Debtor filed his Chapter 7 petition on March 19, 2020. [Doc. # 1]. In his petition, Debtor lists unliquidated student loans of $16,900.00 due to DOE. [Id. at Schedule E/F, 4.5 at pp. 20/48]. They were not scheduled as disputed or contingent. Debtor received his discharge on July 17, 2020. [Doc. # 16]. He has not brought an adversary complaint seeking a determination that these loans are an undue hardship. Thus, they are excepted from his discharge under
On December 14, 2020, the Chapter 7 Trustee moved to reopen the case to enable him to administer nеwly discovered assets. [Doc. # 19]. Upon reopening, a claims bar date was set. Navient Solutions as servicer timely filed the DOE claim in the amount of $13,832.77 on December 18, 2020. [Claim No. 1]. Debtor filed his objection to the DOE claim on November 3, 2022. [Doc. # 37].
Under the Bankruptcy Code, the term “claim” is defined as:
right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or
right to equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured.
Section 502(a) of the Bankruptcy Code,
Debtors do not automatically have standing to object to claims in Chapter 7 cases. Caserta v. Tobin, 175 B.R. 773 (S.D. Fla. 1994) (Chapter 7 debtor, in case where there is no surplus, laсked standing to object to claim). In this case, based on
Sectiоn 502(b) of the Bankruptcy Code sets the standards against which the bankruptcy court shall decide allowance or disallowance of a claim when there is an objeсtion filed by a party in interest:
...[i]f such objection to a claim is made, the court, after notice and a hearing, shall determine the amount of such claim in lawful currency оf the United States as of the date of the filing of the petition, and shall allow such claim in such amount, except to the extent that
(1) Such claim is unenforceable against the debtor and property of the debtor, under an agreement or applicable law for a reason other than because such claim is contingent or unmatured;1
Even if it were inclined to do so, there is no reason to hold the objection in abeyance pending litigation over President Biden‘s proposed student loan forgiveness program, however it might come out and whatever it might mean to Debtor. Section 502(b) makes it clear that the time for determination of a claim is “as of the date of the filing of the petition,” not some indeterminаte later time depending on post-petition developments in the law and the facts and estate administration. See In re Sears, 863 F.3d 973, 978 (8th Cir. 2017)(post-petition misconduct is not a basis for disallowance of creditor‘s claim because Section 502(b) requires that the claim be determined as of the date of the filing of the petition); In re Brown, 606 B.R. 40, 46, n. 6 (9th Cir. B.A.P. 2019). That the petition datе is the relevant time for assessing allowability coincides with
DOE‘s claim is for a debt that existed at the time Debtor filed his voluntary petition. No challenge has been raised tо the amount of the claim as filed. Subsequent developments that might affect the dischargeability of the debt as to Debtor were there no assets in this bankruptcy estate have nothing to do with the claim against the bankruptcy estate as a source of payment as of the petition date.2 Where
For the reasons stated above and otherwise by the court on the record, President Biden‘s announcement of potential post-petition student loаn forgiveness applicable to Debtor‘s federal student loans and his application to participate in the program should it go forward does not overсome the prima facie validity of the DOE claim as of the date of the petition.
IT IS THEREFORE ORDERED that Debtor‘s Objection [Doc. # 37] is OVERRULED. Claim No. 1 of Navient Solutions, LLC on behalf of Department of Education Loan Services is allowed as filed.
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