Chapter 7 asset case with student loans

[Vandervecken]

Good evening! I have another question and I thought it was worth a separate thread.

My chapter 7 is an asset case and the trustee has sent out the request for claims. About 60% of my unsecured debt is in federal student loans that cannot be discharged. Just for grins I called the student loan servicer and talked to their bankruptcy department. They do not file claims in asset cases.

So my question: in this type of case why would a student loan servicer NOT file a claim? Are they prohibited by law? Or just being lazy since their debt is not being discharged?

And of course the flip side... can I file a claim for them? And if I do, will the trustee reject the claim?

Let's be honest, if I have to cough up $30k, I'd like a chunk of it to go to my non-dischargable debt.

Thanks everybody!

[justbroke]

Their reluctance, or simply their policy, to not file just based on time and money. You can always complete a claim on behalf of a creditor. I've done this in my Chapter 13 case because a secured creditor didn't file (and I wanted them paid).

If your student loans are truly 60% of the allowed unsecured claims, and there is no priority debt, they would probably get something shy of 60% of the pool of money left after the Trustee collects their fees. I don't know if you need to list the servicer or both the servicer and the holder of the loan.

I have not personally done this so these are just my thoughts.

[Vandervecken]

Thanks! I was afraid that their special position as nondischargable meant they could not receive a distribution.

Since posting my question I found this article on Cornell's website. It's a few years old, but hopefully nothing has changed:

Committee Notes on Rules—2005 Amendment

The rule is amended to conform to §501(c) of the Code. Under that provision, the debtor or trustee may file proof of a claim if the creditor fails to do so in a timely fashion. The rule previously authorized the debtor and the trustee to file a claim as early as the day after the first date set for the meeting of creditors under §341(a). Under the amended rule, the debtor and trustee must wait until the creditor's opportunity to file a claim has expired. Providing the debtor and the trustee with the opportunity to file a claim ensures that the claim will participate in any distribution in the case. This is particularly important for claims that are nondischargeable.

Since the debtor and trustee cannot file a proof of claim until after the creditor's time to file has expired, the rule no longer permits the creditor to file a proof of claim that will supersede the claim filed by the debtor or trustee. The rule leaves to the courts the issue of whether to permit subsequent amendment of such proof of claim.

[LadyInTheRed]

That must refer to Federal Rule of Bankruptcy Procedure 3004. You must file the proof of claim within 30 days after the time for creditors to file proofs of claim has expired.

[Vandervecken]

Thanks LITR!

[Vandervecken]

Thinking out loud, if my attorney files the student loan claim for me, does the trustee have any grounds to deny the claim? I'm just wondering because a student loan is unsecured, but it is also a nondischargable debt.

[justbroke]

The Trustee has no grounds to deny any claim, but they can object to a claim. They would need a reason that it's not a "valid" claim on its face, such as... it's not a real claim. Trustees usually only object to (Chapter 7) claims that have material defects such as the claimant does not own the claim.

I don't see it as an issue.

[Vandervecken]

Thanks, JB... applying a big chunk of the money against the student loans takes a lot of the sting out.