Student Loan Default: Monmouth County Bankruptcy Lawyer

Tuesday , 13, January 2015 Comments Off on Student Loan Default: Monmouth County Bankruptcy Lawyer

Bankruptcy Lawyer in Marlboro NJ.

Monmouth County Bankruptcy Lawyers breakdown student loans. It is no secret the student loans are growing problem. In fact major media outlets across the board have been releasing articles and such about the growing problem. Adding fuel to this growing fire is the present status of the U.S. Bankruptcy Code and jurisprudence in the U.S. Bankruptcy Courts. It makes it very difficult (although not impossible) to discharge student loan debts. However, with the growing exposure and increased frequency of defaulting student loans the Courts and/or future legislation may start to change.

This change may result from efforts by crafty Lawyers and desperate student loan debtors who begin to challenge the status quo of the present status of the U.S. Bankruptcy Code and jurisprudence in the U.S. Bankruptcy Courts.

One such example, which serves a reference, is the Ninth Circuit recent decision which affirmed the bankruptcy court’s partial discharge of a debtor’s student loan burden. The Circuit Court arrived at its decision by applying a more relaxed application of “undue hardship.”  Hedlund v. Educational Resources Institute, 2013 WL 2232325 (9th Cir. May 22, 2013).  The Ninth Circuit emphasized that a debtor must make reasonable efforts to repay student loan debt rather than show extreme efforts to repay.  Id.  For example, the court concluded the debtor need not be required to move to another city or state due to low pay and underemployment in his area in order to qualify for a discharge of student loan debt.

This decision, as well as others not mentioned in this post, show that there may be a growing tide in which Courts are reassessing the harsh test set forth in Brunner, which is to date the seminal case on student loan discharge.  Although, it is safe to say that student loans are generally not dischargeable, there are certain cases in which it is worth a shot to try for a least a partial discharge. One thing that will not help your case, if the time ever came to try for a discharge, is completely ignoring your student loans (allowing them to default). Student loan debtors should monitor their loans closely. Take advantage of Income Based Repayment or Economic Hardship Deferment programs which may provide relief. Just ignoring your student loans and allowing them to default will put you on the right path to show “undue hardship” in t