Update: Since this article was posted, Jones Swanson and co-counsel have had two more wins in cases involving student loans and bankruptcy. In both of those recent cases, judges in the Eastern District of New York have denied defendants’ motions to dismiss. The cases are Homaidan, et al. v. SLM Corporation, et al. and Golden, et al. v. National Collegiate Student Loan Trusts 2006-4, et al.
An estimated 16,000 student debtors got one crucial step closer to getting some loan relief last month when a Texas judge ruled in a nationwide putative class action that some private student loans are dischargeable in bankruptcy.
The case is Evan Brian Crocker, et al. v. Navient Solutions, LLC and Navient Credit Finance Corporation. Representing the putative class members are the law firms of Jones, Swanson, Huddell & Garrison and Fishman Haygood; as well as The Smith Law Group; the Law Office of Joshua B. Kons; Corral Tran Singh; Ross, Banks, May, Cron & Cavin; and Boies Schiller Flexner.
On Monday, March 26, 2018, Judge David R. Jones, Chief Judge of the US Bankruptcy Court in the Southern District of Texas, denied Navient’s motion for summary judgment in the case. Navient had argued that, according to the US Bankruptcy Code, student loans are excepted from discharge in bankruptcy except in cases of “undue hardship.”
But Judge Jones made it clear that he thought Navient was overreaching in its interpretation of the US Bankruptcy Code. In a six-page ruling, he wrote that the Code was “unambiguous” when it specified that nondischargeable debts included only those given “in the form of an educational benefit, a scholarship or a stipend” and that it “did not include all loans that were in some way used by a debtor for education. If such were the case, would not a loan for a car used by a commuter student to travel to and from school every day be nondischargeable under § 523(a)(8)(A)(ii)? The answer is obvious.”
If the class action is successful, an estimated 16,000 student debtors around the country will be relieved of some or all of their private student debt. The lawsuit also requests that some of these student debtors get refunds of payments they’ve already made to Navient.
At Navient’s request, and “in recognition of the importance of the matters that are the subject of this proceeding,” Judge Jones certified his order for immediate review by the US Court of Appeals for the Fifth Circuit.
For more information about the national class action, who it represents, and how to join it, click here.
For more information about regulatory actions and lawsuits against Navient, click here.