Recent Maine Bankruptcy Court Cases

Posted on 05/20/2017 at 09:32 pm by Viewed 581 times

Two decisions from the Maine Bankruptcy help us understand how the Court will process Chapter 13 cases and how the Court will consider the dischargeability of student loan debts.

Filing for Chapter 13
In the case of In re Jones, the Court concluded that Section 1324 of the Bankruptcy Code required debtors to schedule a hearing on confirmation of their Chapter 13 plan no less than 20 and no more than 45 days after the meeting of creditors.  Because the debtors failed to do so, the Court held that the debtors could not confirm a Chapter 13 plan.  The Court did not decide when, if ever, the debtors might confirm a plan in the future. This is a very important case because, until now, Section 1324 of the Code had not been followed precisely by the Maine Bankruptcy Court. As a result of this decision, the Court Clerk's office is scheduling confirmation hearing dates within the 45 days limitation of Section 1324 to prevent future debtors from being prevented from successfully using Chapter 13 to address their debts.

Discharge of Student Loans
The Case of Brown v. Northstar Education Finance, Inc. assists us in understanding the standards under which the Court will discharge student loans.  In the Brown case, the debtor was attempting to discharge $112,000 of student loans.  The debtor attended law school, but was unable to find a job as an attorney.  Her efforts to open her own practice were unsuccessful.  She went to nursing school, but was unable to perform the work as a nurse.  Her physical problems caused her to be unable to find employment to maintain a minimal standard of living.  However, the debtor was unable to establish that she did not have reliable future income based upon her nursing or law degrees.  Debtor's testimony was not credible that she was unable to find employment due to her disabilities; the Court concluded that she did not establish by a preponderance of the evidence that she was unable to find sustainable employment.

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