Summary:
Judge Kenneth D. Bell’s denial of Navient’s motion for summary judgment in Ready v. Navient (W.D.N.C. No. 5:24-cv-00050) is a sharp reminder that even student loan creditors must prove the underlying debt. Navient insisted that Ms. Christy Ready had taken out a 1995 consolidation loan through “Citibank (NYS)” which was later rolled into a 2002 consolidation. Ms. Ready disputed this, questioning the authenticity of the electronic signature on the 2002 note and producing a notarized declaration from a Citibank NA vice president stating that Citibank had no record of any such loan. With this conflict in the evidence, Judge Bell correctly found a genuine issue of material fact, requiring the case to go to trial.
Application in Bankruptcy: Rule 3001 and the Burden of Proof:
Bankruptcy Rule 3001 requires every creditor—including student loan servicers—to file proofs of claim supported by documentation of the underlying obligation. Without this evidence, a claim loses its prima facie validity. Courts have been clear that the burden begins with the creditor: it must establish both the existence of the debt and that it qualifies under one of the narrow exceptions in §523(a)(8). Only after that showing does the burden shift to the debtor to prove undue hardship.
Yet, as Jason Iuliano’s Student Loan Bankruptcy and the Meaning of Educational Benefit demonstrated, courts have too often allowed all creditors, but particularly when related to putative student loans, to bypass these thresholds, assuming without proof that any “educational” debt is both valid and nondischargeable. Ready pushes back against that trend.
Discovery as a Tool for Debtors:
Importantly, Ready also illustrates that debtors—whether in bankruptcy or not—can use discovery to expose gaps and contradictions in student loan creditors’ claims. In federal and state court litigation, borrowers can demand production of the original loan documents, payment histories, and correspondence. In bankruptcy adversary proceedings, Rule 2004 examinations, interrogatories, requests for admission, and document subpoenas all provide avenues to test the creditor’s assertions.
In Ms. Ready’s case, the discovery process unearthed a key discrepancy: Navient’s claim of a Citibank loan was directly contradicted by Citibank’s own declaration that it could find no such record. That factual conflict was enough to defeat summary judgment.
The practical lesson is that debtors are not passive bystanders. They can—and should—demand proof. A creditor’s internal database printout is not gospel. (Despite what some large credit unions also believe in avoiding compliance in filing mortgage proofs of claim without complying with mandatory forms.) Without authenticated documentation, the claim falters.
Commentary:
Another nice win for Shane Perry and Stacy Williams.
For consumer bankruptcy practitioners, the practice pointers are clear:
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Use Rule 3001 as a shield. If a proof of claim lacks proper documentation, object and demand compliance.
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Leverage discovery aggressively. Whether in bankruptcy adversaries or outside litigation under the FDCPA, FCRA, or state law, discovery is the debtor’s tool to pierce through a servicer’s boilerplate assertions.
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Remember the sequence. Creditors must first prove a valid debt that falls within §523(a)(8). Only then do questions of “undue hardship” even arise.
Takeaway:
Ready v. Navient reinforces a simple but powerful principle: calling something a “student loan” does not make it so. It may not even make it a valid debt. Creditors bear the burden of proving both the existence of the debt and its statutory character, and debtors have powerful procedural tools—Rule 3001 objections and discovery mechanisms—to hold them to that burden.
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