Consumer Bankruptcy

By: Sabihul Alam

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

 

In In re Moore, the United States District Court for the Eastern District of Virginia found that Novus Law School violated a discharge injunction by refusing to issue a transcript or award a degree to Moore, a law student, until he paid his outstanding tuition balance, which had been discharged in Moore’s chapter 7 proceeding.[1] Moore successfully completed a two-year juris doctor program at Novus, a non-accredited web-based private law school, yet, at the time of completion, had an outstanding balance from unpaid tuition.[2] Moore’s obligation did not arise as a result of a government loan program, but instead was part of his tuition bill which he decided not to pay as it came due.[3] In May 2008, Moore filed for chapter 7 relief on account of his over $400,000 debt, approximately $6,000 of which was owed to Novus.[4] After receiving notification of Moore’s filing, Novus sent Moore an email stating that the law school would not grant Moore a degree nor certify his graduate status to employers if his debt was discharged through bankruptcy.[5] Subsequently, the court granted Moore a bankruptcy discharge.[6] The tuition owed to the law school was among those debts discharged.[7] In keeping with its prior warning, Novus refused to issue Moore his Juris Doctor degree or a transcript.[8] Moore then filed a motion seeking contempt sanctions against Novus for violating the discharge injunction for refusing to award Moore a degree or issue a transcript.[9]

 

By: Leslie M. Hyatt

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

 

Recently, in In re Egebjerg, the United States Court of Appeals for the Ninth Circuit dismissed, as abusive, a debtor’s chapter 7 petition because it found that the payments owed to the debtor’s 401(k) were not debt and thus, the debtor had excess disposable monthly income.[1] In 2004, the debtor borrowed money from his 401(k) to keep up with financial obligations and personal expenses. To repay the money owed to his 401(k), the debtor had his employer deduct $733.90 from his monthly paycheck. In 2006, the debtor had $31,000 in unsecured consumer debt and filed for chapter 7.[2]