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ABI Exclusive

Government Bar Date Applies to DOE Loans Even When the Servicer Is Private

As long as the student loan is owing to the government, the Fifth Circuit holds that the government bar date applies even when the servicer is a private company.


The extended bar date for governmental claims applies if a governmental unit is the holder of the claim, even if a nongovernmental entity is the servicer of the claim, the Fifth Circuit says.

A couple filed a chapter 13 petition and listed the wife’s student loans. In the schedules, they listed the creditor as being both the U.S. Department of Education and the nongovernmental loan servicer.

Neither the DOE nor the servicer filed a proof of claim by the bar date for nongovernmental creditors. Likewise, neither filed a proof of claim before the governmental bar date about three months later under Section 502(b)(9)(A).

With no claim on file, the debtors exercised their right under Section 501(b) and filed a claim for the student loans less than 30 days after the governmental bar date.

A creditor objected to the student loan claim, asserting that the claim filed by the debtors was untimely because it was not filed within 30 days after the nongovernmental bar date. The bankruptcy court sustained the objection, saying that the loan account statements filed by the debtor showed the lender to be the servicer with no indication that the loan was owing to a governmental unit.

The debtors filed a motion for rehearing, this time attaching the note that stated that the loan was owed to the DOE. The bankruptcy court denied the motion for rehearing, saying that the servicer had standing to file a claim but was not an agent for the government.

The district court affirmed, prompting an appeal to the Fifth Circuit.

In a per curiam, nonprecedential opinion on August 15, the Fifth Circuit panel found the answer by identifying the “creditor” with a right to file a claim. Putting definitions together under Section 101, the panel said that a creditor is someone with a “right to payment.”

The panel analyzed the note, which said, among other things, that the loan was owed to the DOE and not to the servicer. The panel found the DOE to be the creditor because the “DOE clearly had an enforceable obligation manifesting in a right to payment for [the wife’s] student loan debt.”

Since the DOE was “undoubtedly” a governmental unit under Section 101(27), the panel held that the applicable bar date was the governmental bar date, meaning that the claim filed by the debtors was timely.

“Unfortunately,” the panel said in a footnote, the lower courts did not analyze who held the claim. The panel said that the servicer’s standing to file a claim was “immaterial,” because the DOE and the servicer both “could each plausibly file a proof of claim.”

Given that the DOE was a governmental unit with an “enforceable obligation” invoking the governmental bar date, the panel reversed and remanded, presumably to overrule the claim objection.

The Panel

The panel was composed of Circuit Judges Catharina Haynes and Kurt D. Engelhardt, with District Judge Diana Saldaña sitting by designation.

Opinion Link

Case Details

Case Citation

Charles v. United Community Bank Inc. (In re Charles), 22-20552 (5th Cir. Aug. 15, 2023).

Case Name

Charles v. United Community Bank Inc. (In re Charles)

Case Type