In re: WILLIAM SALTER AND JUDITH SALTER, HUSBAND AND WIFE, Debtor; WILLIAM SALTER, Plaintiff vs. THE EDUCATIONAL RESOURCES INSTITUTE, INC., Defendant, 207 B.R. 272

Summary

The debtor obtained a student loan for his daughter's education. After the debtor defaulted on the loan, the debtor and the creditor reached a stipulation of settlement, under which the terms of the original loan were modified. After the debtor defaulted under the settlement, the debtor filed for Chapter 7 bankruptcy protection. The debtor then filed an adversary proceeding against the creditor, seeking a determination that the loan was not within the exception to discharge provided by 11 U.S.C.S. § 523(a)(8)(A). The court granted summary judgment in favor of the creditor, ruling that the focus of § 523(a)(8)(A) was on how the money was spent, not on the identity of the borrower. Thus, the court held that, although courts were split on the issue, it did not matter for purposes of § 523(a)(8)(A) that the father was not a student. The court then found that the settlement did not create a new loan for purposes of the seven-year period within which student loans could not be discharged. ...