Student Loans

09 Nov Student Loans: “When You’re in a Hole, Stop Digging,” Appeals Court Agrees

The Eighth Circuit Bankruptcy Appellate Panel upheld a lower court's ruling discharging $204,525.00 in student loans, despite the lender's argument that the debtor could have continued her education and sought higher-paying employment as a chiropractor. Shaffer v. U.S Department of Education, No. 12-601o (8th Cir.BAP Oct. 30, 2012), involved an unmarrieddebtor in her mid thirties who filed chapter 7. She started her undergraduate education at the University of Northern Iowa in 1994, and later enrolled at Iowa University, obtaining a degree in psychology in 2002. Afterward, sheattended Kirkwood Community Collegeoff and on, in order to qualify under her parents' health insurance. In 2007, the debtor enrolled at Palmer College of Chiropractic Medicine, but she left after thirteen months after concluding that her student loan debt was insurmountable. The debtor also suffered from depression, eating disorders, self harm in the form of cutting, and anxiety. In 2008 she commenced employment at a women's health clinic, but left one year later. She next worked as an accounts receivable specialist at a different employer, but left after depression caused her to take two leaves of absence, believing she was about to be fired.
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19 Sep Student Loan Debt A National Bankruptcy Disaster

  [caption id="attachment_30546" align="alignleft" width="150"] Image from Dreamstime[/caption] Discharge of student loans in bankruptcy is an uphill battle according to a New York Times article. News papers these days abound with descriptions of truly desperate families saddled with massive student debt. The story of Ohio student loan debtor Doug Wallace, age 31, unemployed and legally blind is hardly unusual. In fact, it is so commonplace that bankruptcy lawyers hardly pay attention to such cases and their compelling facts. While bankruptcy discharge of student loan debt is theoretically possible, and does occur in a few cases, it is a difficult proposition at best. A debtor seeking relief from student loan debt must convince the court their financial situation is not only hopeless; they must prove it will not likely change for the better in the future. Without dramatic facts, discharge of student loan debt is denied in most bankruptcy courts.
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