Judge Vacates Student Loan Servicer’s $354K Ch. 7 Sanction

Law360 (June 23, 2021, 4:46 p.m. EDT) – A New York federal judge overturned a contempt penalty of over $ 354,000 imposed on a student loan manager for failing to appear in a bankruptcy case, claiming that the order was punitive and gave the debtor in case of an undeserved windfall.

In an order issued Tuesday, United States District Court Judge Gregory Woods said the bankruptcy judge hearing the case of debtor Sheldon Leary wrongly imposed a punitive sanction against Great Lakes Educational Loan Services Inc without the possibility of correcting his actions and had based the size of the company on Leary’s mistaken belief that he had paid off his student loan debt.

“Because the…

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