And additionally exploring the statutory words involved and you will checking out the legislative reputation for § 523(a)(8)(B), new judge will additionally consider the purpose of the mortgage by by using the “compound of the deal take to,” an examination employed by of numerous process of law looking at § 523(a)(8)(A) cases
36. For example, several cases conclude that a debt is nondischargeable when a guarantor pays off a student loan. Look for, age.grams., Miller v. Gomez (In the lso are Gomez), Nos. 17-61024, 17-6048, 2017 WL 5952682, at *1-2 (Bankr. D. Or. ). Corrosion, 510 B.R. at 565. Thus, it makes sense that guarantors would be within the realm of those parties protected by § 523(a)(8). Allowing accommodation parties to have the same protections from discharge as government and non-profit lenders “supports the Congressional intent of allowing educational loans to be available to those who might not be able to get them on their own” and entices cosigners to lend a hand to students. Kelly, 582 B.Roentgen. during the 912 (citing Rust, 510 B.R. at 572). The same cannot be said for the Jubers, as they did not guarantee the Three Original Loans, cosign the Three Original Loans, or in any way provide additional “financial backing” necessary for the Debtor to secure the Three Original Loans. Unlike the cosigners in Rust, Corbin, and Kelly, the Jubers’ did not sign on to assist the Debtor in the event of default; the Jubers took over the Debtor’s obligations in full and paid off the Three Original Loans out of love for their son.
Benson v. Corbin (In the re also Corbin), 506 B.R. 287, 296 (Bankr. W.D. Wash. 2014), Rust, 510 B.R. at 564, and De- Los angeles Rosa v. Kelly (In re also Kelly), 582 B.R. 905, 907 (Bankr. S.D. Tex. 2018) involve plaintiffs who were either cosigners or guarantors of student debts. In each case, the debtors defaulted on their student loan payments and the plaintiffs, as accommodation parties, were required to pay off the student loans. Corbin, 506 B.R. at 290; Rust, 510 B.R. at 565; Kelly, 582 B.R. at 907. When the debtors later tried to discharge their debts to the plaintiffs, the plaintiffs argued nondischargeability under § 523(a)(8)(ii). Corbin, 506 B.R. at 291-92; Rust, 510 B.R. at 565-66; Kelly, 582 B.R. at 907. The Kelly court notes that the text of § 523(a)(8) never uses the word “lender,” and as such, accommodation parties such as the plaintiffs in Corbin, Rust, and Kelly, all came “within the universe of parties who [could] bring nondischargeability complaints.” Kelly, 582 B.R. at 914. Kelly notes that the purpose of the statutory scheme was to protect government entities and non-profits. Id. Allowing cosigners to have the same protections as other institutional lenders further protected the government and non-profits because “many lenders would not provide loans without the backing of an accommodation party who would guarantee the debt.” Id. at 912. ——–
This type of instances remember that without any make certain of your own new mortgage, the young most likely would have been ineligible to own a beneficial mortgage
37. See Tift Cty. Hosp. Auth. v. Nies (In the re also Nies), 334 B.R. 495, 501-02 (Bankr. D. Mass. 2005). While this court cannot locate another court applying this test to the language of § 523(a)(8)(B), it is instructive in the absence of relevant case law given its application to other provisions of § 523(a)(8).
38. “A majority of courts ha[ve] adopted a test that determines the educational nature of the loan by focusing on the substance of the transaction which resulted in the obligation.” Id. at 501 (citing DePasquale v. Bos. Univ. Sch. out-of Oral (Into the lso are DePasquale), 225 B.R. 830, 832 (B.A.P. 1st Cir. 1998)); look for Sokolik v. Milwaukee Sch. out of Eng’g (From inside the re Sokolik), 635 F.3d 261, 266 (7th Cir. 2011); Murphy v. Pa. Highest Educ. Recommendations Company (In lso are Murphy), 282 F.3d 868, 870 (5th Cir. 2002). “The ‘substance of the transaction test’ reflects recognition of the congressional purpose of § 523(a)(8), namely to ensure the availability of educational financing.” Nies, 334 B.R. payday loan no credit check Watertown at 502. Congress achieved its goal by “principally protect[ing] government entities and non-profits-places which lend money or guarantee loans to individuals for educational purposes-from bankruptcy discharge.” Id. (alteration in original) (quoting TI Given. Borrowing Union v. DelBonis, 72 F.3d 921, 937 (1st Cir. 1995)). “The ‘substance of the transaction test’ recognizes that the purpose of § 523(a)(8) is to exempt entities that make educational loans from the effect of a borrower’s bankruptcy discharge,” Rumer, 469 B.R. at 562 (citing Nies, 334 B.R. at 501), and the statute itself is “concerned with the circumstances surrounding the origination of the loan, rather than what benefits the debtor may have derived” from the loan, id. A “bankruptcy court reviewing a § 523(a)(8) case ‘need only ask whether the lender’s agreement with the borrower was predicated on the borrower being a student who needed financial support to get through school.’ ” Id. (quoting Sokolik, 635 F.3d at 266).
