More news this week about the impossibility of getting
student loans discharged in bankruptcy.
Unfortunately, I, similar to most attorneys, have to charge in my services.
And, bankrupt people, usually, do not have extra money laying around for attorney fees.
Because, although you may file bankruptcy, you still owe your student loans.? Unless, YOU file a lawsuit, in the bankruptcy court, and, prove not wearing running shoes would be an undue hardship on your behalf, or your dependents, to have to repay a student loans.
So, there are not a lot of such education loan discharge lawsuits filed.
And, too many of those, no lawyer.? That is certainly, the person who filed the bankruptcy represents themselves within the student loan lawsuit.
From the Bloomberg story:
Monica Stitt, a 45-year-old woman, is?unemployed, disabled, and living far below the poverty line. Still, a federal district?judge decided in June?which she could not cancel more than $37,000 in?student debt?in bankruptcy, because she hadn\’t developed a good-faith attempt at repaying the loans.?
Her entire income-about $10,000 each and every year, according to the judge-consisted of Social Security disability benefits and public assistance. She\’s got been unemployed since 2008.
Well, I really believe both courts ruled the wrong manner on this one.
First, the bankruptcy court, after which it, on the appeal, the Federal District court.
Even the judge said:
Stitt met the initial criterion, because a judge declared that even if she paid only $3.50 daily in interest on the loan, she\’d still not?have a minimal standard of living.??Yet the judge said she failed the?third a part of the test-showing a?good-faith effort to repay the loan-in part because she?held?a government-sponsored problem for a few months in 2008, when she earned $11,000. The bankruptcy judge criticized her because of using some of the income to repay her student loans. Stitt?said she used the wages to pay credit card debt and other expenses.
To mean, this mis-reads favorable faith prong of the Brunner test.
Because they can be government student loans, Ms. Stith ought to have, and could still, apply for the income based repayment programs, and pay nothing.
She might need to keep the government updated to be with her income, to remain qualified.
If her income elevated enough, she would have to pay something, up until the 25 year program runs out.
So, she took her very own advice, and it was bad.
For legal problems, see a lawyer.