Hann v. Educ. Credit Mgmt. Corp.

During Appellee's chapter 13 bankruptcy, Educational Credit Management Corporation (ECMC) filed a proof of claim based on Appellee's allegedly unpaid student loans. Appellee objected to the claim because she believed her loans had been repaid. The bankruptcy court sustained Appellee's objection. After the bankruptcy concluded, ECMC resumed collection efforts. Appellee reopened her case and filed an adversary complaint against ECMC, alleging that it had violated the order sustaining her objection. The bankruptcy court concluded the order reflected the prior judge's determination that the obligation remaining on ECMC's claim was zero and therefore sanctioned ECMC for attempting to collect on the debt. The bankruptcy appellate panel affirmed. ECMC appealed, arguing that the bankruptcy court never adjudicated the amount outstanding on Appellee's student loans. The First Circuit Court of Appeals affirmed, holding (1) during bankruptcy proceedings, the issue of the amount ECMC would get from Appellee's estate was resolved by way of the subsidiary factual issue of whether the debt had already been repaid; and (2) the bankruptcy court did not err in imposing sanctions, as ECMC's conduct was an abuse of the bankruptcy process. View "Hann v. Educ. Credit Mgmt. Corp." on Justia Law