A debtor who had defaulted on a student loan asked a bankruptcy court to decide that the studentloan principal was fully paid. The court made a determination about the student-loan principal, determining the debtor still owed what was due on the student loan. However, the court also decided that postpetition interest was to be awarded, and collection costs were to be denied.
Subsequently, the Educational Credit Management Corporation appealed this decision, claiming that the court lacked jurisdiction over postpetition interest and collection costs because the court was a bankruptcy court. In other words, postpetition interest and collection costs did not fall under United States Code Title 11 (over which the bankruptcy court had jurisdiction) or 28 U.S.C. § 1334(a) or (b) (over which the bankruptcy court also had jurisdiction).
Furthermore, the Credit Management Corporation argued that a bankruptcy proceeding is completely unrelated to collection costs and postpetition interest. Do you think the Credit Management Corporation's appeal was successful? Was the decision of the first court reversed?
Educational Credit Management Corp. v. Kirkland, 600 F.3d 310; 2010 U.S. App. LEXIS 5212 (4th Cir. 2010).