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United Student Aid Funds, Inc. v. Espinosa, No. 08-1134

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By FindLaw Staff on March 23, 2010 4:28 PM

United Student Aid Funds, Inc. v. Espinosa, No. 08-1134, involved an appeal from a bankruptcy court order in a Chapter 13 proceeding, enforcing the confirmation of a student loan debtor's plan and directing creditors to cease any collection efforts. 

The Supreme Court affirmed the Ninth Circuit's judgment reversing the district court's order in favor of student loan creditor, holding that 1) creditor's actual notice of the filing and contents of the debtor's plan more than satisfied its due process rights, and thus debtor's failure to make the required service did not entitle creditor to relief under Fed. R. Civ. P. 60(b)(4); 2) although the bankruptcy court's failure to find undue hardship in this case was a legal error, the confirmation order was enforceable and binding on creditor because it had actual notice of the error and failed to object or timely appeal; but 3) the Ninth Circuit erred in holding that bankruptcy courts must confirm a plan proposing the discharge of a student loan debt without an undue hardship determination in an adversary proceeding unless the creditor timely raises a specific objection.

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