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Apparenty courts have held that even if a student loan were completely
privately funded, if at any time it is sold to or even processed by a
non-profit entity, then it falls in to the category of: loans touched
by government or government-affiliated entities or not-for-profit
entities and it is thus non-dischargeable in a bankruptcy (barring
proven undue hardship). Therefore, it would seem, the question of how
to define a "student loan" is of paramount importance.
My questions thus stem from the the following hypothetical:
A large bank, such as Key Bank, initiates a $20,000 "career loan" (not
governmentally subsidized or guarantted, private) for a
bachelor-degree holding "student" in flight training school, who did
not intend to switch careers and did not consider himself or herself a
student in the traditional sense, but was very open about just wanting
to fund costly flight training. The loan is funded by a subsidiary
with the word "education" in it: "Key Education Resources," to which
payments were sent.
Would bankruptcy court determine this to be a student loan? Is it
necessary to file a Complaint to Determine Dischargeability of a Debt
for this matter in a bankruptcy proceeding?
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