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    Notice of Proposed Distribution

    This is a great forum and very helpful. I have a question about my Chapter 7 BK case. We filed on 9/8/05, got a discharge on 1/4/06 and have been waiting for the case to close. Today we received a "Notice of Trustee's Final Report and Application for Administrative Compensation and Reimbursement of Expenses and Notice of Proposed Distribution" (that's a mouthful!)
    The weird thing about the proposed distribution is that it lists the US Dept of Education Direct Loan Servicing Center as one of the claimants that is receiving a payment! Although I listed my $72,000 in student loans on my bankruptcy, I did not attempt to have them discharged through undue hardship and I assumed that they were not discharged. I consolidated them in June and have been making my payments each month since the discharge. I am confused as to why they are listed as an allowed claim and receiving payment. Is it possible that these loans were actually discharged and I just didn't know? Thanks for your help!

    #2
    They are not discharged - they just want a piece of your bankruptcy assets. But unless you have other nondischargeable claims being paid by your bankruptcy estate, you'll be better off this way. That way, discharged creditors will get less and nondischargeable creditors will get more. Your bankruptcy estate is doing more for you this way.
    DISCLAIMER: I am not an attorney. My posts are not legal advice. They are for information only. Please feel free to use them in an academic sense, as I simply wish to share with you what I have learned/researched.

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      #3
      So it sounds like this will actually reduce my student loan debt? Does that apply even though I have consolidated my loans since the discharge? The loan that was reported on my BK filing is now considered "paid in full" since I have a new consolidated loan. Will the distribution payment go to the new consolidated loan? That would be awesome! Thanks for your help.

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