Source: https://www.law.cornell.edu/cfr/text/34/674.49
Timestamp: 2017-01-22 17:03:01
Document Index: 294963922

Matched Legal Cases: ['art 674', '§ 674', '§ 424', '§ 425', '§ 428', '§ 465', '§ 1070', '§ 1087', '§ 1087', '§ 1087', '§ 1087', '§ 1087', '§ 1087', '§ 1087', '§ 1087', '§ 1087', '§ 1091', '§ 1091', '§ 1094', '§ 1096', '§ 1141', '§ 1232', '§ 1232', '§ 1401']

34 CFR 674.49 - Bankruptcy of borrower. | US Law | LII / Legal Information Institute
CFR › Title 34 › Subtitle B › Chapter VI › Part 674 › Subpart C › Section 674.49 34 CFR 674.49 - Bankruptcy of borrower.
§ 674.49 Bankruptcy of borrower.
General. If an institution receives notice that a borrower has filed a petition for relief in bankruptcy, usually by receiving a notice of meeting of creditors, the institution and its agents shall immediately suspend any collection efforts outside the bankruptcy proceeding against the borrower.
Proof of claim. The institution must file a proof of claim in the bankruptcy proceeding unless - (1) In the case of a proceeding under chapter 7 of the Bankruptcy Code, the notice of meeting of creditors states that the borrower has no assets, or (2) In the case of a bankruptcy proceeding under either Chapter 7 or Chapter 13 of the Bankruptcy Code in which the repayment plan proposes that the borrower repay less than the full amount owed on the loan, the institution has an authoritative determination by an appropriate State official that in the opinion of the State official, the institution is an agency of the State and is, on that basis, under applicable State law, immune from suit. (c)
Borrower's request for determination of dischargeability.
(1) The institution must use due diligence and may assert any defense consistent with its status under applicable law to avoid discharge of the loan. The institution must follow the procedures in this paragraph to respond to a complaint for a determination of dischargeability under 11 U.S.C. 523(a)(8) on the ground that repayment of the loan would impose an undue hardship on the borrower and his or her dependents, unless discharge would be more effectively opposed by avoiding that action.
(2) If the petition for relief in bankruptcy was filed before October 8, 1998 and more than seven years of the repayment period on the loan (excluding any applicable suspension of the repayment period defined in 34 CFR 682.402(m)) have passed before the borrower filed the petition, the institution may not oppose a determination of dischargeability requested under 11 U.S.C. 523(a)(8)(B) on the ground of undue hardship.
(3) In any other case, the institution must determine, on the basis of reasonably available information, whether repayment of the loan under either the current repayment schedule or any adjusted schedule authorized under subpart B or D of this part would impose an undue hardship on the borrower and his or her dependents.
(5) If the expected costs of opposing discharge of such a loan do not exceed one-third of the total amount owed on the loan, the institution shall - (i) Oppose the borrower's request for a determination of dischargeability; and
(6) In opposing a request for a determination of dischargeability, the institution may compromise a portion of the amount owed on the loan if it reasonably determines that the compromise is necessary in order to obtain a judgment on the loan.
Request for determination of non-dischargeability. The institution may file a complaint for a determination that a loan obligation is not dischargeable and for judgment on the loan if the institution would have been required under paragraph (c) of this section to oppose a request for a determination of dischargeability with regard to that loan.
(2) The institution is not required to respond to a proposed repayment plan, if - (i) The borrower proposes under the repayment plan to repay all principal, interest, late charges and collection costs on the loan; or
(i) If the borrower proposes under the repayment plan to repay less than the total amount owed on the loan, the institution shall determine from its own records and court documents - (A) The amount of the loan obligation dischargeable under the plan by deducting the total payments on the loan proposed under the plan from the total amount owed;
(ii) If the institution reasonably expects that costs of the appropriate actions will not exceed one-third of the dischargeable loan debt, the institution shall - (A) Object to confirmation of a proposed plan that does not meet the requirements of 11 U.S.C. 1325; and
(i) The institution must monitor the borrower's compliance with the requirements of the plan confirmed by the court. If the institution determines that the debtor has not made the payments required under the plan, or has filed a request for a “hardship discharge” under 11 U.S.C. 1328(b), the institution must determine from its own records and information derived from documents filed with the court - (A) Whether grounds exist under 11 U.S.C. 1307 to convert or dismiss the case; and
(B) Whether the borrower has demonstrated entitlement to the “hardship discharge” by meeting the requirements of 11 U.S.C. 1328(b).
(ii) If the institution reasonably expects that costs of the appropriate actions, when added to the costs already incurred in taking actions authorized under this section, will not exceed one-third of the dischargeable loan debt, the institution shall - (A) Move to dismiss or convert a case where grounds can be established under 11 U.S.C. 1307; or
Resumption of collection from the borrower. The institution shall resume billing and collection action prescribed in this subpart after - (1) The borrower's petition for relief in bankruptcy has been dismissed;
(2) The borrower has received a discharge under 11 U.S.C. 727, 11 U.S.C. 1141, or 11 U.S.C. 1228, unless - (i) The court has found that repayment of the loan would impose an undue hardship on the borrower and the dependents of the borrower; or
(A) The petition for relief was filed before October 8, 1998;
(B) The loan entered the repayment period more than seven years (excluding any applicable suspension of the repayment period as defined by 34 CFR 682.402(m), and
(C) The loan is not excepted from discharge under other applicable provisions of the Code; or
(3) The borrower has received a discharge under 11 U.S.C. 1328(a) or 1328(b), unless - (i) The court has found that repayment of the loan would impose an undue hardship on the borrower and the dependents of the borrower; or
(B) The loan entered the repayment period more than seven years (excluding any application suspension of the repayment period as defined by 34 CFR 682.402(m) before the filing of the petition; and
(C) The borrower's plan approved in the bankruptcy proceeding made some provision with regard to either the loan obligation or unsecured debts in general.
Termination of collection and write-off.
(1) An institution must terminate all collection action and write off a loan if it receives a general order of discharge - (i) In a bankruptcy in which the borrower filed for relief before October 8, 1998, if the loan entered the repayment period more than seven years (exclusive of any applicable suspension of the repayment period defined by 34 CFR 682.402(m)) from the date on which a petition for relief was filed; or
(ii) In any other case, a judgment that repayment of the debt would constitute an undue hardship and that the debt is therefore dischargeable.
(2) If an institution receives a repayment from a borrower after a loan has been discharged, it must deposit that payment in its Fund.
[52 FR 45555, Nov. 30, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 57 FR 32346, July 21, 1992; 59 FR 1652, Jan. 12, 1994; 59 FR 61412, Nov. 30, 1994; 64 FR 58313, Oct. 28, 1999; 65 FR 65614, Nov. 1, 2000] This is a list of United States Code sections, Statutes at Large, Public Laws, and Presidential Documents, which provide rulemaking authority for this CFR Part.This list is taken from the Parallel Table of Authorities and Rules provided by GPO [Government Printing Office].It is not guaranteed to be accurate or up-to-date, though we do refresh the database weekly. More limitations on accuracy are described at the GPO site.United States CodeU.S. Code: Title 20 - EDUCATION§ 424§ 425§ 428§ 465§ 1070g - Definitions§ 1087aa - Appropriations authorized§ 1087bb - Allocation of funds§ 1087cc - Agreements with institutions of higher education§ 1087cc-1§ 1087dd - Terms of loans§ 1087ee - Cancellation of loans for certain public service§ 1087ff - Distribution of assets from student loan funds§ 1087gg - Collection of defaulted loans: Perkins Loan Revolving Fund§ 1087hh - General authority of Secretary§ 1091 - Student eligibility§ 1091a - Statute of limitations, and State court judgments§ 1094 - Program participation agreements§ 1096 - Administrative expenses§ 1141 - College access challenge grant program§ 1232c - State agency monitoring and enforcement§ 1232f - Records§ 1401 - Definitions