Consent Order in Settlement of Student Loan Adversary Proceeding
Consent Order in Settlement of Adversary Proceeding Between Plaintiff and Student Loan Creditor / Servicer
It appearing that the Plaintiff, [Borrower] (“Plaintiff”), and [Student Loan Creditor / Servicer] (“Creditor”), by and through their undersigned counsel, have agreed to the terms set forth herein, as evidenced by the signatures below, and the following facts being stipulated to:
Stipulated Background
A. On or about [Bankruptcy Filing Date], the above-captioned Plaintiff filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code. A discharge of eligible debts was entered on or about [Discharge Date].
B. On or about [Adversary Filing Date], the Plaintiff filed a complaint naming the Creditor as the defendant, seeking a determination of the dischargeability of educational loan debt under 11 U.S.C. § 523(a)(8).
C. On or about [Answer Date], the Creditor filed its answer to the Plaintiff’s complaint.
D. The Plaintiff is indebted to the Creditor pursuant to the applicable terms of one educational loan promissory note (“Promissory Note”), executed by the Plaintiff to obtain an educational loan (“Student Loan”), and initially disbursed on or about [Original Disbursement Date].
E. As of the filing of the adversary proceeding, there was a balance due and owing under the Plaintiff’s Promissory Note, including principal and interest, in the approximate aggregate amount of $[Original Outstanding Balance] (“Outstanding Balance”), with interest accruing thereafter pursuant to the Promissory Note.
F. The Outstanding Balance is currently due and owing on the Promissory Note, and the Student Loan evidenced by the Promissory Note is treated by the parties under this Consent Order as a nondischargeable educational loan pursuant to 11 U.S.C. § 523(a)(8), except as modified by the settlement terms set forth below.
Order
It is hereby ordered that:
1. Reduced Balance and Repayment Terms. For so long as the Plaintiff does not default under this Consent Order, the Plaintiff’s Outstanding Balance shall be reduced to $[Reduced Settlement Balance] (“Reduced Balance”), and the applicable interest rate shall be reduced to a fixed rate of [Reduced Interest Rate]% (“Reduced Interest”). The Plaintiff shall repay the Reduced Balance at the Reduced Interest rate in monthly installments of $[Monthly Payment] for a period of [Number of Months] consecutive months. The first monthly payment shall be due on or before [First Payment Due Date], with subsequent payments due on or before the same day of each month thereafter.
2. Payment Instructions. All payments made pursuant to this Consent Order shall reference the Plaintiff’s account number, [Account Number Redacted], and shall be transmitted to [Payment Recipient / Servicer] at [Payment Address Redacted], or to any other address provided to the Plaintiff by the Creditor or servicer in writing.
3. Events of Default. The following shall constitute Events of Default under this Consent Order: (a) the Plaintiff fails to make any payment due hereunder within [Grace Period] days of the due date without securing the Creditor’s or servicer’s agreement to a forbearance of such payment; or (b) the Plaintiff commences any further legal proceedings against the Creditor, servicer, or their predecessors, successors, or assigns, seeking to discharge debt.
4. Consequences of Default. Upon the occurrence of an Event of Default under this Consent Order, pursuant to Paragraph 3, any forgiveness of principal and interest shall be revoked, and the Plaintiff shall be liable for the full amount of the Outstanding Balance referenced above, plus interest pursuant to the applicable terms of the Promissory Note for the Plaintiff’s Student Loan, less any payments made under this Consent Order. Following default, payments made under this Consent Order shall be applied first to interest that would have accrued had this Consent Order not been in effect, and then to principal.
5. Prepayment. There shall be no penalty for prepayment under this Consent Order. However, any prepayment, unless payment is made in full, shall not relieve the Plaintiff of the obligation to make ongoing monthly payments as required by this Consent Order.
6. Deferment or Forbearance. If the Plaintiff, pursuant to applicable Creditor or servicer policy and the terms of the Promissory Note, qualifies for, or the parties agree to, any deferment or forbearance of payment obligations after this Consent Order is entered, interest shall continue to accrue during the period of deferment or forbearance at the interest rate stated herein. As a result, the total amount to be repaid and the required monthly payments may increase from the amounts stated herein.
7. Billing and Repayment Issues. Should any issue arise related to billing or repayment of loans subject to this agreement, and should the Plaintiff believe that billing or collection efforts related to loans subject to this agreement are not in accordance with this Consent Order, the Plaintiff agrees that such issues should be directed to [Designated Bankruptcy Litigation Contact / Department] at [Contact Information Redacted], or to any other contact information provided by the Creditor or servicer in writing or in response to a specific borrower inquiry. The parties understand that communications not directed as specified in this Paragraph may not be addressed in a timely manner or in a manner specifically in accordance with this Consent Order.
8. Remaining Promissory Note Terms. Except as provided in this Consent Order, all other terms of the Promissory Note remain in effect and are incorporated by reference.
9. Amendments, Modifications, and Waivers. Any amendment, modification, or waiver of any term or condition of this Consent Order must be made in writing and signed by all parties hereto.
10. Counterparts and Electronic Signatures. This Consent Order may be executed in counterparts, or by facsimile or electronic transmission, each of which shall constitute an original, but all of which together shall constitute one and the same Consent Order.
11. Dismissal of Adversary Proceeding. The instant adversary proceeding is dismissed, subject to the terms of this Consent Order.
Signature Blocks Redacted
The original document included signature blocks for counsel for the creditor and counsel for the plaintiff. Those blocks have been omitted from this public-facing version because they contained names, bar information, addresses, telephone numbers, email addresses, and matter-specific signature details.
Publication Caution
The default provision in Paragraph 3(b) is potentially significant because it treats certain future discharge-related legal proceedings against the creditor, servicer, predecessors, successors, or assigns as an Event of Default. If this agreement is used as a reference, that clause should be reviewed carefully — treat it as an example of language to scrutinize, not as a model provision or general recommendation.