Consumer complaint received 2021-10-13
Product: Debt collection — Private student loan debt
Issue: Attempts to collect debt not owed — Debt was already discharged in bankruptcy and is no longer owed
Company: Navient Solutions, LLC. (OR)

On XX/XX/XXXX I received a full discharge of debts via Chapter XXXX Bankruptcy. See Bankruptcy Discharge Order, XXXX XXXX. XXXX. However, Navient, a creditor has refused to acknowledge the discharge of the debts and continues to report the discharged accounts as open as well as illegally engage in collection activities. It was determined that the private loan debts associated with Navient do not qualify as non-dischargeable, and thus did not require an adversary proceeding for discharge, therefore making them included in the general discharge order. 

The two statutes that dictate dischargeability are 11 U.S.C. 523 ( a ) ( 8 ) ( A ) and 11 U.S.C. 523 ( a ) ( 8 ) ( B ). Navient has already affirmed the loans do not fit the requirements under 11 U.S.C. 523 ( a ) ( 8 ) ( A ) and that they do not have information to prove or show cause that the loans fit under 11 U.S.C. 523 ( a ) ( 8 ) ( B ).

It is important to note that this complaint is not an argument that the loans should be discharged. This complaint is to assert the fact that the discharge already happened and Navient refuses to comply with the legal discharge order. 

The exact language of statutes being referred to throughout this complaint are written below as a reference - 11 U.S.C. 523 ( a ) ( 8 ) states : ( a ) A discharge under section 727, 1141, 1192 [ 1 ] 1228 ( a ), 1228 ( b ), or 1328 ( b ) of this title does not discharge an individual debtor from any debt ( 8 ) unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtors dependents, for ( A ) ( i ) an educational benefit overpayment or 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 nonprofit institution ; or ( ii ) an obligation to repay funds received as an educational benefit, scholarship, or stipend ; or ( B ) any other educational loan that is a qualified education loan, as defined in section 221 ( d ) ( 1 ) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual ; As referenced by 11 U.S.C. 523 ( a ) ( 8 ) ( B ) - section 221 ( d ) ( 1 ) of the Internal Revenue Code of 1986 states : ( d ) Definitions For purposes of this section ( 1 ) Qualified education loan : The term qualified education loan means any indebtedness incurred by the taxpayer solely to pay qualified higher education expenses RE : 11 U.S.C. 523 ( a ) ( 8 ) ( A ) The loans are not considered an educational benefit per the most recent ruling by the United States Court of Appeals for the Second Circuit which stated The defining characteristic of a loan, by contrast, is an unconditional obligation to pay it back. Interpreting educational benefit to cover all private student loans when the two terms listed in tandem describe specific and quite limited kinds of payments that... do not usually require repayment, In re Crocker, 941 F.3d at 220, would improperly broaden 523 ( a ) ( 8 ) ( A ) ( ii ) s scope. Homaidan v. SLM Corp. ( In re Homaidan ), 596 B.R. 86 ( Bankr. E.D.N.Y. 2019 ). As such, they would not be exempt from the general discharge order. In fact, Navient agreed with and recognized this fact in an email from their Customer Advocate, XXXX XXXX and both her Supervisor, XXXX XXXX, and Navients Associate General Counsel, XXXX XXXX, conceded to this fact. Yet, they still have not removed me from the account nor updated the credit bureaus ; and persist with unlawful collection attempts. 

In prior communication with Navient, Navient already agreed and stated that the private loans associated with Account # XXXX " do not meet the criteria for non-dischargeability under 11 U.S.C. 523 ( a ) ( 8 ) ( A ) ( ii ) '' [ a direct quote from Navient ]. See Navient Response Email dated XX/XX/XXXX. Thus, the loans did not require additional action beyond the general discharge i.e., did not require an adversary proceeding. As a result, the loans were included in the general discharge ordered on XX/XX/XXXX ; and are to be recognized as discharged which requires Navient to remove my name from the account and update the credit bureaus accordingly.

RE : 11 U.S.C. 523 ( a ) ( 8 ) ( B ) It also has already been confirmed that the loans also did not meet the criteria for non-dischargeability under 11 U.S.C. 523 ( a ) ( 8 ) ( B ) as they do not meet the definition of a " qualified education loan '' as defined in section 221 ( d ) ( 1 ) of the Internal Revenue Code of 1986 ; because " Navient would not have information regarding how the proceeds were applied '' [ a direct quote from Navient ] and thus Navient can not factually assert that they were used " solely '' for qualified education expenses. See Navient Response Email dated XX/XX/2021. To be clear, if even one ( 1 ) cent of any loan is used for anything other than a qualified education expense, that means it was not " solely '' used for qualified education expenses and as such it can not be deemed a " qualified education loan '' per section 221 ( d ) ( 1 ) of the Internal Revenue Code of 1986. I have already affirmed and informed Navient that the loans were not " solely '' used for qualified education expenses, and Navient conceded that they have no evidence to the contrary. Thus, the private loans associated with my Navient account failed to meet the criteria for non-dischargeability that would require an adversary proceeding, and as a result were included in the general discharge order. 

In fact, when presenting this information to Navients Associate General Counsel, XXXX XXXX, he did not argue against or challenge the fact that the loans were not used solely for qualified education expenses. Furthermore, he inaccurately stated that the loans " are non-dischargeable in bankruptcy because they were certified by XXXX XXXX  as being within the total costs of your attendance '', and related this to the term " qualified education loans, as that term is defined in 221 ( d ) ( 1 ) of the Internal Revenue Code ''. See Navient Response Letter dated XX/XX/XXXX. However, this attribution is wrong and misleading- the language in the statute is very specific and narrow ; and makes it clear that a certification by the university as to the cost of attendance is not what makes a loan a " qualified education loan ''. Thus, Navient is not arguing or asserting that the loans were used solely for qualified education expenses which is the requirement under 11 U.S.C. 523 ( a ) ( 8 ) ( B ).

In this complaint, I provided the exact language from the statute and it is explicit in that it states the indebtedness must be " incurred by the taxpayer solely to pay qualified higher education expenses ''. XXXX XXXX XXXX certification of the cost of attendance does not certify that the funds were incurred " solely to pay qualified higher education expenses ''. It is a gross misrepresentation of facts by Navient to state that this in any way certifies the purpose of the loan- as it is clear the university only certified the amount of the loan as it compares to the cost of attendance, not the purpose of the loans. In fact, by Navients own assertion, " the stated purpose of your Loans, and not the ultimate use of proceeds, is what controls dischargeability under Bankruptcy Code 523 ( a ) ( 8 ) ''. See Navient Response Letter dated XX/XX/XXXX. As such, neither the university nor I certified the stated purpose of the Loans. Thus, the loans do not fall into the purview of 11 U.S.C. 523 ( a ) ( 8 ) ( B ), and therefore they do not fit the definition of 'non-dischargeable ', and as such, were included as part of the general discharge order related to my bankruptcy proceeding. To reiterate, the loan amounts falling within the total cost of attendance does not indicate nor serve as proof that they were incurred solely for qualified higher education expenses. 

Furthermore, the promissory agreement signed for the Loans concedes that the Loans may be incurred for and consist of " funds that can not reasonably be attributed to meeting the education expense of the student borrower related to attendance at the School ''. See Sallie Mae Promissory Note XXXX. In addition, the School Certification section of the loan applications simply state " the Total Certified Amount does not exceed the student 's cost of attendance ''. See Sallie Mae Promissory Note XXXX. XXXX XXXX  did not in any way certify the stated purpose of the loan - which by Navients own assertion, the stated purpose of the loan is what courts have used to interpret 221 ( d ) ( 1 ) of the Internal Revenue Code, and represents Navient 's position. To reiterate, a stated purpose would have to be explicit in stating that the loans were incurred solely and only for qualified education expenses not simply that they may be used for those expense but that they would only be used for those qualified expenses. Thus, by Navients own assertion - since there is an absence of the stated purpose of the loan, the Loans would qualify as being included in the general discharge ordered on XX/XX/XXXX. 

XXXX XXXX, on behalf of Navient, stated that the sole and only reason for Navients refusal to recognize the discharge is that, XXXX XXXX certification that your Loans were used to pay for the cost of attendance controls. Thats their stated purpose. See Navient Email Dated XX/XX/XXXX. However, this assertion is undeniably false. XXXX XXXX  directly disagreed with and contradicted XXXX XXXX statement that characterized their certification process. How can XXXX XXXX, on behalf of Navient, stand by this false assertion and refuse to acknowledge the legal discharge when the certifying entity in question, XXXX XXXX, has confirmed that their certification does not provide or verify a stated purpose? 

Attached to this complaint is email from XXXX XXXX  confirming that their certification process does not verify, assert, and is not any way related to the stated purpose of the loans nor the usage of the proceeds. Per XXXX XXXX Financial Aid Office, " Certification '' is the name of the process in which a financial aid counselor at a school verifies the amount of a loan a student is eligible to receive with the loan provider. A student is eligible for a loan if they are credit approved by the loan provider and the amount requested fits within the student 's Cost of Attendance budget for the year. See XXXX  XXXX  Email dated XX/XX/XXXX. 


Conclusion : There are only two things that could have made the loans ineligible for discharge - and these loans fit neither of those requirements. Navient has already agreed that the loans do not meet the definition of educational benefit as defined by recent court rulings. Navient has also agreed that there is no evidence to show that the loans were used solely for qualified education expenses. XXXX XXXX  has also confirmed that their certification process does not verify, allude to, confirm, or in any way represent the stated purpose of the loans. Thus, all attendant facts that show that the loans were not exempt from discharge and also did not fit the criteria of qualified educational loans. 

It is abundantly clear that the private loans associated with Navient account were discharged via the general discharge ordered on XX/XX/XXXX. However, Navient refuses to comply with the discharge order. 

Furthermore, to avoid correcting their errors, XXXX XXXX has explicitly stated that Navient will not engage with me about my account, which boldly and unabashedly violates my consumer rights. He has also insinuated that obtaining an attorney is the only way that they will communicate with me about the debts. The seriousness of an attorney, unlicensed in my home state and representing the creditor at the highest level, withholding my account information unless I follow his inappropriate and unsolicited legal advice can not be understated. This is a result of their efforts to illegally collect on loans that have been discharged and to proceed with illegally reporting them as active. 

This is not an opinion or dispute ; it is a matter of law and facts that Navient has blatantly decided to disregard. 

Thank you, XXXX XXXX