U.S.A.F. v. Espinosa
In U.S.A.F. v. Espinosa, the Supreme Court found in favor of a bankrupt man whose student loan interest was erroneously discharged. The bankruptcy court overseeing the borrower’s original proceedings failed to requite the borrower to show “undue hardship”, which is typically required before student loans ban be discharged. When the Department of Education later tried to collect the unpaid interest based on this error, the lower courts grabbled with whether or not the issue was appealable, despite U.S.A.F.’s failure to object or timely appeal. The Supreme Court finally determined once and for all that because it was a final judgment, and judgment are only void if there is a jurisdictional error or it is in violation of due process. Since the error did not amount to a due process violation since they had notice of error at the time it occurred, thus, it was only a legal error, and is still enforceable and binding. Score one for the borrowers.
United Student Aid Funds, Inc. v. Espinosa, 2010 WL 1027825.
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