The Bankruptcy Code expressly disallows claims for unmatured interest. The rule disallowing claims for unmatured interest would include debts excepted from discharge. Thus, while Great Lakes may have had a claim for unmatured interest, or a claim for interest that would be earned during the pending bankruptcy, it would have been disallowed. The fact that Great Lakes' claim for postpetition interest would have been disallowed has nothing to do with whether postpetition interest is dischargeable. Almost all courts that have considered the issue presented have concluded that the disallowance of postpetition interest has no effect on the dischargeability of a claim for, and an individual's future liability for, such interest.
Interest is an integral part of a continuing debt.
It provides an incentive for the borrower to promptly repay. It represents the borrowers cost of use of the money. Because Ridder's student loan was not discharged, the debt was continuing. Postpetition interest is an integral part of the undischarged debt and would itself be nondischargeable. The logic behind disallowing unmatured interest during the pendency of the bankruptcy case is related to administrative and equity concerns.