In a narrow decision by the United States Supreme Court on Tuesday, the Court sided against a student-loan company, saying that the company could not collect interest on an erroneous student loan discharge by the Bankruptcy Court.
The student, Francisco Espinosa, had filed bankruptcy several years earlier. At that time, the Bankruptcy Court discharged the $5,000 in interest remaining on the loan, allowing Espinosa to pay back the $13,000 in loan principal.
During the bankruptcy process, the student loan company, United Student Aid Funds, was given a chance to object to student loan discharge and had been alerted to Espinosa's bankruptcy petition. United, however, came after Espinosa for the interest, claiming that the notice of the bankruptcy petition was not adequate process for the student loan discharge.