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Student Loans Not Discharged After Seven Years if
Good Faith Error in Repayment Suspension
Description Debtor requested suspension of repayment of student loans while enrolled as part-time student after graduation. Lender mistakenly granted suspension of repayment. Bankruptcy, filed more than seven years after loan repayment should have started, did not discharge student loans since payment extension was erroneously granted in good faith.
Topic Bankruptcy
Key Words Student Loans; Discharge
C A S E   S U M M A R Y
Facts Woodcock graduated from law school and finished his MBA in 1983. His student loans came due nine months later. Because he was a part-time student until 1990, he requested payment be deferred, which the lender incorrectly approved. Since he was not in a degree program, payment should not have been deferred under the terms of the loan. Woodcock filed bankruptcy in 1992, more than seven years after the loans first became due. Hence, that debt is discharged unless there was an "applicable suspension of the repayment period." Bankruptcy court and district court held for the bank; Woodcock appealed.
Decision Affirmed. The extension of the repayment period was mistaken, but it was in good faith, so it is an "applicable suspension" under the statute that tolls the running of the seven-year period of nondischargeability.
Citation Woodcock v. Chemical Bank, 144 F.3d 1340 (10th Cir., 1998)

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