DEBTOR CASE NO. 90-01622





VS. ADV. NO. 91-0038







This matter is before the Court on the defendant's Motion for Summary Judgment and the plaintiff's Response thereto. Both parties have filed briefs. On May 3, 1991, this Court entered an Order sustaining the defendant's Motion to take the matter under submission on the record without a hearing. This Court has jurisdiction of this matter pursuant to 28 U.S.C. '1334(b); it is a core proceeding pursuant to 28 U.S.C. '157(b)(2)(I).

The parties have memorialized Stipulations of Fact which reveal the following facts:

1. The plaintiff was enrolled at Northern Kentucky University for the 1977-1982 academic years. She last attended on December 15, 1982.

2. The plaintiff borrowed Kentucky Higher Education Assistance Authority ("KHEAA")-insured student loan funds of $6,100.00 through the American National Bank at 7% annual interest.

3. The plaintiff's loan "entered repayment" on September 17, 1983. Forbearances of payment were granted for the periods September 1, 1983 through February 2, 1984 and September 1, 1984 through February 1, 1985 pursuant to 34 CFR '682.211. The plaintiff was also granted an Unemployment Deferment for the period March 1, 1985 through September 1, 1985 pursuant to 34 CFR '682.210.

4. The plaintiff filed a Chapter 13 petition on November 25, 1987 which was subsequently dismissed on September 7, 1989. Regularly scheduled payments were suspended and collection activity was stayed during this period by operation of law.

5. The plaintiff has paid a total of $192.02 toward her account, all of which was applied to accrued interest, and the current principal indebtedness as of April 1, 1991 is $6,100.00.

6. The plaintiff filed a Chapter 7 petition on December 21, 1990.

This adversary proceeding was commenced by the filing of the plaintiff's Complaint to Determine Dischargeability of Student Loan on February 19, 1991. Therein she contended that the subject student loan first became due more than five years before the filing of her Chapter 7 petition and was therefore dischargeable pursuant to 11 U.S.C. '523(a)(8)(A). This statute provides as follows:

' 523. Exceptions to discharge.

(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor form any debt---


(8) for an educational loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or a non-profit institution, unless---

(A) such loan first became due before five years (exclusive of any applicable suspension of the repayment period) before the date of the filing of the petition;

The defendant's Answer filed on March 7, 1991, contends that, in addition to the forebearances granted to the plaintiff pursuant to 34 CFR ''682.210 and 682.211, the period during which the automatic stay was in effect in the plaintiff's Chapter 13 case (November 25, 1987 through September 7, 1989) constituted an "applicable suspension of the repayment period" and thus brought the plaintiff outside the five-year provision. The defendant's Motion for Summary Judgment, filed on April 30, 1991, is based on this contention. The plaintiff argues in her Response, filed on May 15, 1991, that the period during which the automatic stay was in effect in her Chapter 13 case does not operate as an "applicable suspension of the repayment period".

Both parties point out in their briefs that there are no cases exactly on point in this matter. The defendant argues that the language of the statute is broad and cites Matter of Eckles, 52 B.R. 433 (Bkrtcy.E.D.Wis. 1985) in support of this proposition. The court in In re Shryock, 102 B.R. 217 (Bkrtcy.D.Kan. 1989), cited Eckles in holding that "[t]he term 'suspension' has been broadly interpreted by the courts to include any time the original repayment period is set aside either by cessation of payments or modification of payments." At 219. It is uncontroverted herein that the plaintiff's loan payments were suspended during the period of the Chapter 13 automatic stay.

In analyzing whether certain forbearances were "applicable suspension[s] of the repayment period", the court in In re Georgina, 124 B.R. 562 (Bkrtcy.W.D.Mo. 1991) reasoned as follows:

To determine what Congress intended to be included within 'any applicable suspension of the repayment period', we should look first to the legislative history of the statute. That legislative history expresses an intent to discharge student loans that have been 'due and owing' for more than five years. Senate Report No. 950989, 95th Cong., 2d Sess. 79 (1978), reprinted in U.S. Code Cong. & Admin. News 1978, pp. 5787, 5865. Therefore, the question before this Court is whether the student loans of the debtor were 'due and owing' during the periods that he requested and was granted forbearance. So stated, it is self-evident that while the loans were in the forbearance periods agreed to by both parties, they, while arguably still 'owed' by the debtor, were not 'due'.

At 564. This reasoning can be applied to the period during which the automatic stay was in effect in the plaintiff's Chapter 13 case. It is the essence of the automatic stay that creditors' efforts to collect debts from the bankruptcy debtor cease upon the filing of the petition. The debtor is not required to make any payments on the debts. Therefore, in the case at bar, the plaintiff's student loans were not "due" during the automatic stay.

In consideration of all the foregoing, it is therefore the opinion of this Court that the period from November 25, 1987 through September 9, 1989, when the automatic stay was in effect in the plaintiff's Chapter 13 case, should be included as an "applicable suspension of the repayment period", thereby rendering the date when the loan repayment first became due less than five years from the date of filing of her Chapter 7 petition. Consequently, the defendant's Motion for Summary Judgment should be SUSTAINED.



By the Court -






Copies to:

Jay T. Bosken, Esq.

Richard F. Casey, Esq.