7th Circuit allows the discharge of student loan debt in bankruptcy

[Anonymous]

I always thought student loans and taxes were the two things that could not be discharged in a bankruptcy for any reasons. Well the 7th Circuit has proved me wrong, and I am happy that I am. The 50 year-old plaintiff was a trained paralegal who lived in a rural area of the country, and she was taking care of her elderly mother. She found it difficult to find a job in her profession. The lower court said that there was a possibility of future earnings, if the plaintiff found a job in another profession. Maybe Wal-mart cashier. I don't know. In addition, the lower court said that the plaintiff did not avail herself of the a program to reduce the payments and pay off the loan in a longer period of time. The plaintiff had been paying on the loan for more than ten years and had 25K outstanding. The appellate court reversed and said the plaintiff was destitute and did not have to participate in that program.

I do not have any student loans. I paid mine off long ago. However, I have been disturbed by the increasing high-cost of education on top of these for-profit pop-up institutions bleeding twenty-year old kids dry. We now have twenty-somethings indebted to the tune of 100k+, all in student loans in areas of elementary education, criminal justice, sociology, and marine biology, etc. Or, older students who went back to school to earn some money, so they attended the for-profit institutions and now 40k+ and cannot find a job as a medical assistant, dental assistant, paralegal, etc.

Maybe if more courts allow the discharge of student loans in bankrupty, schools and educational institutions will stop escalating the cost of attendance. In addition, maybe schools will start offering more classes in alignment to a student's ability to obtain gainful employment. Just a thought.

http://www.abajournal.com/news/article/7th_circuit/?utm_source=maestro&utm_medium=email&utm_campaign=weekly_email

[Anonymous]

I agree. It would be a good free market response to address inefficiencies. How many times had trump put his company in bankruptcy?

[Anonymous]

This case is not about whether or not student loans are dischargeable in bankruptcy. This case is about a much more narrow issue of whether or not a borrower's failure to enroll in a repayment plan that could have payments as low as $5/mo should automatically preclude the finding of undue hardship necessary to obtain a discharge.

[Anonymous]

Anonymous wrote:This case is not about whether or not student loans are dischargeable in bankruptcy. This case is about a much more narrow issue of whether or not a borrower's failure to enroll in a repayment plan that could have payments as low as $5/mo should automatically preclude the finding of undue hardship necessary to obtain a discharge.

+1

[Anonymous]

My understanding is that student loans can be discharged if you can prove that it is really impossible for you to do the job you were schooled for because of a physical or mental handicap that arose after the loans were incurred. So if you go to medical school and are trained as a surgeon and you permanently lose the use of your hands, then you should be able to discharge the medical school debt.

[Anonymous]

Anonymous wrote:My understanding is that student loans can be discharged if you can prove that it is really impossible for you to do the job you were schooled for because of a physical or mental handicap that arose after the loans were incurred. So if you go to medical school and are trained as a surgeon and you permanently lose the use of your hands, then you should be able to discharge the medical school debt.

You are confused. Student loans can be discharged administratively due to disability and a couple of other reasons. Those discharges, however, have nothing to do with the bankruptcy discharge at issue here.

[Anonymous]

Good idea.