Opinion
Bankruptcy No. 81-00571-NN.
March 1, 1982.
Richard W. Hudgins, Hudgins Neale, Newport News, Va., for debtors.
ORDER CONFIRMING PLAN
Kevin and Frederika Rowe filed a Chapter 13 petition proposing to pay their creditors 22% of the indebtedness. $22,351.62 of their total $27,802.00 indebtedness is for student loans. At the confirmation hearing, the Court expressed concern as to whether such a plan was confirmable. They modified their plan to pay creditors 32%.
Each is now well educated and each holds professional employment: he a city planner, she a college instructor. At 32% the student loan lenders would receive $7,152.51, $15,199.11 would be dischargeable.
Two legal requirements apply to the facts.
(1) Is the plan confirmable pursuant to 11 U.S.C. § 1325? The only issue which might arise here is that of good faith. § 1325(a)(3). In consideration of their budget, the 32% payment is substantial and meaningful. It is not, therefore, bad faith or a lack of good faith to take advantage of existing generous laws.
(2) Were this a straight bankruptcy under Chapter 7 rather than a Chapter 13 proceeding, the student loan indebtedness would not be dischargeable. 11 U.S.C. § 523(a)(8). The loans here have been due and owing for less than five years and no undue hardship is evident. Clearly, the provisions of § 523 do not apply in a Chapter 13 case. 11 U.S.C. § 1328. In Chapter 13 cases, only two kinds of debts are not dischargeable and student loans is not one of them. In re Seeley-Cox, 6 B.C.D. 1003, 6 B.R. 309 (Bkrtcy.E.D.Va. 1980).
Although the Congress has been rather concerned over this matter of default in student loans and greatly tightened the dischargeability of these both in the Act and the new Code, a gap exists under Chapter 13 of the Code. What had become a national disgrace was acted upon by the Congress with resolve . . . but not here.
The Court is, as it ought to be, bound by the law. Any remedy lies with Congress. Like the shoe shop with a sign that reads "We have an arrangement with the bank. We cash no checks and they repair no shoes." I have an arrangement with Congress: I pass no laws and they repair no shoes.
A confirmation order will issue.
IT IS SO ORDERED.