Volume 5 Winter 2011 Number 2 - Charleston Law Review

CHARLESTON LAW REVIEW [Volume 5On March 23, 2010, the United States Supreme Courtdecided the case of United Student Aid Funds, Inc. v. Espinosa 3on writ of certiorari from the United States Court of Appeals forthe Ninth Circuit, 4 affirming the decision of that court. 5 By thiscase, a debtor was relieved of an obligation to pay a student loan,notwithstanding the fact that the debtor had not followed theprescribed procedure for obtaining a discharge of that debtpursuant to the U.S. Bankruptcy Code (the Code). 6 Studentloans are exempt from discharge unless not doing so wouldimpose an “undue hardship” upon the debtor. 7 The Federal Rules196corporation;(8) after the filing of a case under title 11 or in contemplationthereof, knowingly and fraudulently conceals, destroys, mutilates,falsifies, or makes a false entry in any recorded information (includingbooks, documents, records, and papers) relating to the property orfinancial affairs of a debtor; or(9) after the filing of a case under title 11, knowingly andfraudulently withholds from a custodian, trustee, marshal, or otherofficer of the court or a United States Trustee entitled to itspossession, any recorded information (including books, documents,records, and papers) relating to the property or financial affairs of adebtor;Shall be fined under this title, imprisoned not more than 5 years,or both. (emphasis added).Id.3. United Student Aid Funds, Inc. v. Espinosa (Espinosa), 559 U.S. ___,130 S. Ct. 1367 (2010).4. Espinosa v. United Student Aid Funds, Inc. (United Student AidFunds), 553 F.3d 1193 (9th Cir. 2008).5. Espinosa, 559 U.S. at ___, 130 S. Ct. at 1382.6. Id. at ___, 130 S. Ct. at 1380 (“Given the Code’s clear and self-executingrequirement for an undue hardship determination, the Bankruptcy Court’sfailure to find undue hardship before confirming Espinosa’s plan was legalerror. But the order remains enforceable and binding on United because Unitedhad notice of the error and failed to object or timely appeal.”) (internal citationsomitted). For a description of the procedure, see id. at ___, 130 S. Ct. at 1380–82.7. 11 U.S.C. § 523(a)(8) (2006):(a) A discharge under section 727, 1141, 1228(a), 1228(b), or1328(b) of this title does not discharge an individual debtor from anydebt—. . .(8) unless excepting such debt from discharge under thisparagraph would impose an undue hardship on the debtor and the