Private student loans can be repaid in bankruptcy, court told Navient


A new court ruling states that private student loans can be repaid in the event of bankruptcy.

Here’s what you need to know – and what does it mean for your student loans

Student loans

United States Court of Appeals for the Second Circuit ruled in favor of a student loan borrower who sought to cancel a student loan for their private student loans. Here’s what happened.

Student Loan Cancellation: Bankruptcy

Plaintiff Hilal K. Homaidan borrowed student loans from Sally Mae (Navient became the assignee of these student loans) to attend Emerson College in Boston. The student loans consisted of two loans for tuition fees totaling $ 12,567. The plaintiff said these student loans were not used to pay for Emerson’s tuition and were transferred directly to his bank account. After graduation, Homaidan filed for bankruptcy to pay off his student loans. The bankruptcy court dismissed him from office, but did not specify in its decision whether private student loans would also be canceled. Lender Navient has begun collecting private student loan payments from Homaidan, the borrower. Homaidan agreed to pay off the private student loan, mistakenly believing that these student loans were not included in the discharge order. However, after paying the private student loans in full, Homaidan reopened the bankruptcy case to prove that the private student loans he had mistakenly repaid had been repaid as a result of bankruptcy.

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