One of the key aims of the bankruptcy process is affording debtors a “fresh start” by granting them a discharge of their debts, However, the Bankruptcy Code has excepted certain debts that are incapable of being discharged as a matter of right, including, without limitation, certain “qualifying” loans used to fund a debtor’s education. For a debtor to be able to receive a discharge of such loans, the debtor must file a lawsuit and obtain a judgment determining their dischargeability.

In the case of In re Irigoyen, the U.S. Bankruptcy appellate panel for the U.S. Court of Appeals for the Ninth Circuit addressed a matter of first impression associated with this process: namely, the issue of what happens when a debt that may be considered nondischargeable is later determined to be dischargeable, and more importantly, whether efforts to collect such a debt be exempt from penalties for violating the discharge injunction.

Facts and Procedural History