New Jersey Administrative Code › Title 9A - HIGHER EDUCATION › Chapter 10 - STUDENT LOAN AND COLLEGE SAVINGS PROGRAMS › Subchapter 6 - THE NEW JERSEY COLLEGE LOANS TO ASSIST STATE STUDENTS (NJCLASS) PROGRAM: POLICIES AND PROCEDURES › Section 9A:10-6.17 - Discharge

Current through Register Vol. 56, No. 14, July 15, 2024
(a) Rules governing the discharge of loans based on filing for relief in bankruptcy, and discharge of loans due to death or total and permanent disability are set forth in this section. If an NJCLASS Loan Program loan was obtained by two borrowers as co-makers or by a borrower and one or more cosigners, and only one of the borrowers dies, becomes totally and permanently disabled, has collection of his or her loan obligation stayed by a bankruptcy filing, or has that obligation discharged in bankruptcy, the other borrower or cosigner remains obligated to repay the loan, beginning with NJCLASS Loan Program loans, Refinance Loans, or NJCLASS Consolidation Loans using promissory notes dated 1994 or later. If the student for whom the loan was obtained dies or becomes permanently disabled, the obligation of all parties to the loan to make any further payments on the loan is discharged, beginning with requests for discharge received on or after June 1, 2017.
(b) If an individual borrower dies, the obligation of the borrower to make any further payments on the loan is discharged. A discharge of a loan based on the death of the borrower or student must be based on an original or certified copy of the death certificate, or an accurate and complete photocopy of the original or certified copy of the death certificate.
(c) If the Authority determines that an individual borrower is totally and permanently disabled, the obligation of the borrower to make any further payments on the loan is discharged. A borrower is not considered totally and permanently disabled on the basis of a condition that existed at the time he or she applied for the loan, unless the borrower's condition has substantially deteriorated later, so as to render the borrower totally and permanently disabled. After being notified by the borrower, or the borrower's representative, that the borrower claims to be totally and permanently disabled, the Authority shall request that the borrower, or the borrower's representative, submit the discharge application provided by the Authority. The application must contain documentation that the borrower is totally and permanently disabled as defined at N.J.A.C. 9A:10-6.3.
(d) The following pertain to borrower bankruptcy:
1. If the Authority is notified that any of the parties to the note has filed a petition for relief in bankruptcy under Chapters 12 or 13 of the Federal Bankruptcy Code, the Authority shall immediately suspend any collection efforts outside the bankruptcy proceeding against any other of the parties to the note. If the Authority is notified that any of the parties to the note has filed a petition for relief in bankruptcy under Chapters 7 or 11 of the Federal Bankruptcy Code, the Authority may suspend any collection efforts outside the bankruptcy proceeding against any other of the parties to the note.
2. The Authority shall determine that a borrower has filed a petition for relief in bankruptcy on the basis of receiving a notice of the first meeting of creditors or other confirmation issued by the bankruptcy court.
3. The Authority shall conduct a cost benefit analysis in deciding whether to oppose an undue hardship discharge petition, to oppose a plan proposed pursuant to Chapters 11, 12, or 13 of the Federal Bankruptcy Code, or to oppose a discharge pursuant to a plan pursuant to Chapters 11, 12, or 13 of the Federal Bankruptcy Code.