Opinion
6:20-bk-01725-LVV
08-18-2021
In re Michael T May, Debtor.
Chapter 13
ORDER GRANTING AMENDED MOTION TO DEEM STUDENT LOAN IN REPAYMENT STATUS AND NOT IN DEFAULT
Lori V. Vauhgan, United States Bankruptcy Judge
THIS CASE came before the Court on March 24, 2021, on the Debtor's Amended Motion to Deem in Repayment Status and Not in Default (the "Motion")(Doc. No. 27) and the objection to the Motion (Doc. No. 28) filed by the United States of America, on behalf of the Department of Education (collectively "DOE"). The Debtor seeks an order that his student loans are current and in repayment status during this case which renders him eligible to obtain repayment options from the DOE. Although the DOE is willing to work the Debtor to rehabilitate the student loans, the DOE opposes entry of an order which deems the student loans current and in repayment. For the reasons stated below, the Motion is granted.
Debtor, Michael T May (the "Debtor") filed this Chapter 13 bankruptcy case on March 18, 2020. On Bankruptcy Schedule E/F, Debtor disclosed he owed approximately $65,000 to the DOE for student loans. The Debtor filed a Chapter 13 plan with Nonstandard Provisions. The Nonstandard Provisions separately classified the student loans and proposed to pay the DOE $222 monthly while the Debtor sought repayment or settlement options with the DOE, including an income driven repayment plan. The Nonstandard Provisions also provided the student loan will be considered "rehabilitated" upon confirmation and the Debtor would amend or modify the plan in accordance with any agreed upon repayment plan or settlement with the DOE. The Debtor then filed a Notice of Participation in the Student Loan Management Program under Administrative Order FLMB-2019-5.
Doc. No. 1.
Doc. No. 11, Schedule E/F.
Doc. No. 10 at ¶ E. Nonstandard Provisions.
Doc. No. 20.
On August 11, 2020, the Court confirmed the Debtors' Chapter 13 Plan ("Confirmation Order"). The Confirmation Order provided that the DOE would receive monthly payments of $222 and noted that the "LOAN SHALL BE DEEMED IN REPAYMENT STATUS AND ALL PAYMENTS APPLIED." Nobody appealed the Confirmation Order. The Debtor has made payments under the confirmed Chapter 13 Plan, and the DOE has received about 8 payments. Chapter 13 Trustee is also holding funds to disburse for the DOE's claim.
Doc. No. 24.
Doc. No. 24, p. 9 at Note (3).
Now, as provided in his confirmed Chapter 13 Plan, the Debtor seeks a proposed income driven repayment plan from the DOE for the student loans; however, if the student loans are in default, the Debtor is not eligible for the DOE's various repayment programs. Consistent with the Confirmation Order, the Debtor seeks an order which provides that his student loan payments are current and in repayment status during this case. At the hearing, DOE's counsel stated that the DOE will allow the Debtor to work to rehabilitate the student loans, but still opposes the Motion.
Section 1327 of the Bankruptcy Code provides that the provisions of a confirmed Chapter 13 plan bind the debtor and each creditor. 11 U.S.C. § 1327(a). The order confirming a Chapter 13 plan is a final judgment. United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 269 (2010). It is "res judicata on all issues that could have been raised in the confirmation process." In re Adams, Case No. 9:10-bk-15218-FMD, 2014 WL 409043 at *1 (Bankr. M.D. Fla. Feb. 4, 2014). See also In re Gonzalez, 832 F.3d 1251, 1259 n.4 (11th Cir. 2016).
The Debtor has timely made the payments required by the Confirmation Order and Chapter 13 Plan. The Confirmation Order further provides that the student loans shall be deemed in repayment status. The DOE did not object to confirmation of the Plan or appeal the Confirmation Order. The Confirmation Order is a final order, binding on all creditors including the DOE. See United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 269 (2010). Accordingly, it is
ORDERED:
1. The Motion (Doc. No. 27) is GRANTED.
2. The Chapter 13 Trustee is directed to release to the DOE all funds she is holding for the DOE's claim.
3. The Debtor's student loans with the DOE are not in default and in repayment status as provided in the Confirmation Order.
4. The DOE is directed to work with the Debtor to rehabilitate the student loan, and by October 18, 2021, provide the Debtor with any Student Loan Repayment Options as defined in Administrative Order FLMB-2019-5. All other deadlines under Administrative Order FLMB-2019-5 shall run from the entry of this order.
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Attorney Wayne B Spivak is directed to serve a copy of this order on all interested parties who are non-CM/ECF users and file a proof of service within 3 days of entry of the order.