Opinion ID: 2967431
Heading Depth: 3
Heading Rank: 1

Heading: The Kielisches

Text: On December 9, 1991, Kurt and Jean Kielisch submitted a Chapter 13 petition for relief pursuant to the United States Bankruptcy Code. On February 21, 1992, Great Lakes Higher Education Guaranty Corporation (Great Lakes) filed proofs of claim for the Kielisches’ student loans, one in the amount of $10,743.15 for Kurt Kielisch and one in the amount of $12,204.42 for Jean Kielisch. The proofs of claim included only principal and prepetition interest. On March, 30, 1992, the Kielisches filed an amended Chapter 13 plan, replacing the December 1991 plan. The amended plan, which was confirmed on June 12, 1992, provided that the accepted unsecured claims of Great Lakes Higher Education, in the amounts of $12,095.35 and $10,629.00, will be paid in full through the Trustee. (J.A. at 46.) Pursuant to the amended plan, the trustee paid Great Lakes $10,887.63 for Kurt Kielisch and $12,956.43 for Jean Kielisch, and on June 6, 1997, the bankruptcy court entered an order discharging the Kielisches.1 1 The order of discharge, of course, did not encompass nondischargeable debts. When a debtor satisfies its payments under a confirmed plan, the bankruptcy court discharges all debts provided for by the plan, except those specified by § 523(a) as nondischargeable, such as the Kielisches’ student loan debts. In re Cousins, 209 F.3d 38, 40 (1st Cir. 2000). The debtor remains personally responsible for any debt not discharged in bankruptcy. Id. 4 IN RE KIELISCH After the discharge, ECMC, the assignee of the Kielisches’ student loans, pursued collection efforts against them. ECMC asserted that, notwithstanding the payments made under the amended plan and the discharge order, its claims were never fully paid because postpetition interest continued to accrue during the pendency of the Chapter 13 proceedings. ECMC also argued that it was proper to apply plan payments first to accrued postpetition interest before principal and that, as a result, the Kielisches still owed a substantial amount on their loans. The Kielisches, in response to ECMC’s claims, filed a complaint in bankruptcy court to determine the dischargeability of their student loan debt and the proper application of plan payments to that debt. After a hearing, the bankruptcy court held that although ECMC was entitled to postpetition interest on the nondischargeable student loans, it was improper to apply any of the plan payments to postpetition interest. Accordingly, the bankruptcy court required ECMC to recalculate and reapply the payments received by Great Lakes from the estate to determine what amount of postpetition interest on the loans, if any, remained unpaid. The bankruptcy court left it to the parties to determine the extent to which ECMC’s claim has been satisfied. On January 31, 2000, ECMC filed a notice of appeal to the district court. The district court, after reviewing the briefs and the record and without oral argument, affirmed the bankruptcy court’s decision.