A bankruptcy that is recent decision discharged $221,000 in education loan financial obligation.
An innovative new York bankruptcy judge ordered that a man’s $221,000 in figuratively speaking be discharged — a possibly significant development in education loan bankruptcy jurisprudence.
It’s very hard, while not entirely impossible, for borrowers to discharge student education loans in bankruptcy. The federal bankruptcy rule treats pupil loans differently off their kinds of unsecured debt (such as for example personal credit card debt or medical financial obligation). So that you can discharge their figuratively speaking in bankruptcy, education loan borrowers must prove that they have an “undue difficulty” that could avoid them from repaying their figuratively speaking.
The expression “undue hardship” isn’t defined by statute, so federal judges have actually developed tests and requirements to ascertain whether a borrower’s circumstances that are financial a release.