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3. Like many students, Doug Smith financed his education partially through loans, including three (3) Stafford loans of $7,500 each. These student loans were secured

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3. Like many students, Doug Smith financed his education partially through loans, including three (3) Stafford loans of $7,500 each. These student loans were secured through Great Lakes, a student loan company. After Smith's Irish pub failed, he took a job as an adjunct and, because he wasn't paid very much, was soon forced to file for protection under Chapter 13 of the US Bankruptcy Code. Great Lakes filed an unsecured proof of claim for the full amount of the loans, principal plus interest. Smith objected, submitting into evidence a letter from Great Lakes that stated that all of Smith'soutstanding student loan balances had been paid. Smith no longer had any other financial records that would have documented whether he had in fact paid the outstanding principal and interest under the loans, and Smith testified that his frequent visits to the drinking side of the bar had left him with no memory whether he had, or had not, actually paid the balances due under the loans. Nevertheless, based on the letter, and over the objection of Great Lakes that the letter had been issued in error, the court entered an order sustaining Smith's objection to the proof of claim. Case Study Despite the order, can Great Lakes resume its effort to collect the loan balance from Smith? Has Great Lakes acted ethically in this matter? Has Smith acted ethically in this matter? What are the tax implications if Smith is relieved of further responsibility for repaying his student loans without actually having paid them? Assume that Smith can demonstrate that repayment of his student loans would impose an undue hardship

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