Posted on 01/25/2020 6:10:44 PM PST by grundle
A New York bankruptcy judge ordered that a man’s $221,000 in student loans be discharged — a potentially significant development in student loan bankruptcy jurisprudence.
It is very difficult, although not completely impossible, for borrowers to discharge student loans in bankruptcy. The federal bankruptcy code treats student loans differently from other types of consumer debt (such as credit card debt or medical debt). In order to discharge their student loans in bankruptcy, student loan borrowers must prove that they have an “undue hardship” that would prevent them from repaying their student loans.
The phrase “undue hardship” is not defined by statute, so federal judges have created tests and standards to determine whether a borrower’s financial circumstances warrant a discharge. These tests, which were established by precedent-setting legal cases more than 20 years before the student debt crisis became a national issue, are often extraordinarily difficult for borrowers to meet.
Not only is the legal standard for a bankruptcy discharge tough, but the actual process of trying to discharge student debt in bankruptcy is incredibly challenging, as well. In order to prove “undue hardship,” student loan borrowers must file an “adversary proceeding” in bankruptcy court as part of their bankruptcy case. Essentially, this involves suing your student loan lenders, who will fight tooth and nail to try to convince a judge that the borrower does not meet the legal standard for a discharge. This type of litigation can be very lengthy, emotionally draining, and extremely expensive when factoring in attorneys fees.
(Excerpt) Read more at forbes.com ...
Article says it is not over yet. Sounds like he has a long legal battle still ahead of him.
The money needs to come out of the endowments of the universities that gleefully exploited dumb 18-year olds into burying themselves in student loan debt.
No mention of what his degree was in.
Where’s the chart that shows which college majors resulted in the most defaults
Im sure lenders don’t want a precedent set.
Student loans should never have been immune to bankruptcy.
The founding fathers had bankruptcy laws. They didn’t make exceptions.
Not saying we should forgive them all ala warren lunacy.
But lenders should be weighing the risks. If the lender is Gov’t, then Gov’t should weigh the risks.
“The money needs to come out of the endowments of the universities that gleefully exploited dumb 18-year olds into burying themselves in student loan debt.”
Absolutely not. This is no different than any other debt and borrowers must held accountable.
The Banksters rigged the code to exclude student loan debt from discharge.
Just treat it like any other debt.
Then the loans will stop. The rediculous tuitions will stop. The indoctrination will stop. All those Studies Profs will be canned.
Who in the HELL would borrow 220,000 dollars for college this person is to STUPID to be in college!!!!
It is different than any other debt.
You can’t discharge it in bankruptcy.
It’s “too stupid”. :)
This deserves to be said again.
And what of those who accumulated student debt before they changed the rules and made them immune from bankruptcy? ex post facto?
“You can’t discharge it in bankruptcy.”
which is ridiculous.
Agreed.
The government is the problem. The people should not be under writing these loans. Lol
End all federal gov't college student loan programs. Or at the least, only those who are in the military or going to a trade or technical college should be eligible for student aid. No more loans to people getting worthless degrees in Transgender African Eskimo Studies.
I actually don’t have a problem with Government underwriting many of the loans. Peoole with degrees tend to make more and pay more taxes, so it makes sense for Government to encourage education.
Just don’t lower the tariffs and offshore all the jobs or allow a ton of H1b to come in an undercut our people after they incur the debt.
And if government is going to underwrite the loans they should be paying attention to job placement rates and managing it. Not simply underwriting loans in every worthless imaginary degree people can think up.
Bingo!
Right answer.
Racking up 221k in education costs and not learning how to pay it back.
“The money needs to come out of the endowments of the universities that gleefully exploited dumb 18-year olds into burying themselves in student loan debt”
That or go after the Parental co-signers of the loan.
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