Taking on Goliath. Curran Antonelli Obtains Victory for MA Bankruptcy Debtor in Adversary Proceeding Brought by National Lender Seeking to Treat Personal Loan as Non-Dischargeable Student Loan and to Deny the Debtor his Discharge

July 17, 2020

On July 13, 2020, Curran Antonelli, LLP obtained the court approved and stipulated dismissal of an adversary proceeding commenced in the Massachusetts bankruptcy court by a national financial institution against the Firm’s client, an individual Chapter 7 bankruptcy debtor.  In the case, the creditor Bank claimed that it had lent the debtor monies pre-petition to refinance his student loans through its well-publicized national personal loan program.  Although the client had listed the loan on his bankruptcy schedules and characterized the loan as a “personal loan”, the Bank claimed that the client had committed a “false oath” by not identifying the loan as a student loan.  On that basis, the Bank sought to deny the debtor his bankruptcy discharge as to all of his debts under s. 727(a)(4) of the bankruptcy code.  The Bank also sought a finding that the loan was non-dischargeable under s. 523(a) of the bankruptcy code because the debtor allegedly committed actual fraud in seeking the loan pre-petition and the loan was allegedly per se non-dischargeable as a “student loan.”


Curran Antonelli mounted an aggressive defense on behalf of the Debtor.   First, rather than answering the Bank’s complaint, the Firm filed a motion to dismiss certain claims brought by the Bank.  After briefing and a hearing, the bankruptcy court agreed with the client’s arguments and granted the motion, forcing the Bank to file a new amended pleading.  Upon the commencement of discovery, Curran Antonelli issued comprehensive discovery requests seeking an array of documentary information that bore upon the allegations and claims brought by the Bank.  The Firm also noticed a deposition of the Bank, seeking oral testimony from a Bank official about the bases for its allegations and claims against the Debtor, including, in particular, key information about the lending program that generated the client’s loan.  When the Bank failed to comply with the Firm’s discovery requests, Curran Antonelli filed a motion requesting that the bankruptcy court compel the Bank to produce the requested written information.  Additionally, based upon the information and analysis reviewed and conducted by Curran Antonelli, the debtor amended his bankruptcy schedules to include an unfair and deceptive business practices claim against the Bank under Mass. General Laws c. 93A, which provides for the recovery of treble damages and attorneys’ fees.  The Chapter 7 trustee subsequently administered the case, abandoning this claim to the debtor. 


Against this landscape, with the discovery deadlines rapidly approaching and the real threat of a discovery court order looming, the Bank found settlement to be a favorable alternative to further aggressive litigation with Curran Antonelli.  As a result, the Firm negotiated a resolution of the case, resulting in a full dismissal of the Bank’s adversary proceeding.  No other creditors had objected to the client’s obtaining a discharge or to dischargeability of any particular debts.  The net result was a victory for the client who sought a “fresh start” in bankruptcy.

Curran Antonelli, LLP is a leading bankruptcy litigation Firm with decades of deep and broad experience successfully litigating bankruptcy cases in bankruptcy and federal district courts around the country.  The Firm regularly handles actions involving claims for discharge objections, dischargeability, avoidance, recovery, plan confirmation, exemptions and many other bankruptcy issues.

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