Courts Rule That Disabled Woman Living Below the Poverty Line Must Repay Student Loans.Why ! ?

SGT Private RallyPoint Member — Fri, 26 Jun 2015 15:55:20 -0400

The judge has no heart. This woman will never pay her student loans back. Why? Because She Has No Income And Is Disabled. She probably hasn't made any good faith attempts to pay it back because she has no income. This part really burns my butt...

The debtor didn’t meet the “undue hardship” test required by the bankruptcy code, U.S. District Judge Peter J. Messitte said in his opinion. Unlike credit card debt, student loans can almost never be discharged in bankruptcy. The only way people who have filed for bankruptcy can get rid of the debt is by proving that repaying them would impose "undue hardship" on their lives.

That standard is not defined in the law, so it has been left to the courts to decide exactly how bad someone's circumstances need to be to qualify for relief.

Despite proving that paying back her student debt would leave her unable to afford basic living expenses, two judges ruled a woman could not discharge it in bankruptcy.

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 that she could not cancel more than $37,000 in student debt in bankruptcy, because she hadn’t made a good-faith attempt at repaying the loans.
Her entire income—about $10,000 per year, according to the judge—consisted of Social Security disability benefits and public assistance. She has been unemployed since 2008

http://www.bloomberg.com/news/articles/2015-06-22/courts-rule-that-disabled-woman-living-below-the-poverty-line-must-repay-student-loans

Courts Rule That Disabled Woman LivingBelow the Poverty Line Must Repay Student Loans

Despite proving that paying back herstudent debt would leave her unable to afford basic living expenses, two judges ruled a woman could not discharge itin bankruptcy

Response by LTC John Shaw made Jun 26 at 2015 4:17 PM

LTC John Shaw — Fri, 26 Jun 2015 16:17:59 -0400

SGT Private RallyPoint Member Wow! Sad story, her lack of attempt in good faith is what causes her to fail the undue hardship test. Of course good faith is not defined well either. Perhaps if she had prior contact and explained why, sadly the facts don't speak to it. This federal statute was made strict during the last Clinton administration with a Republican Congress.

Response by SFC Mark Merino made Jun 26 at 2015 4:48 PM

SFC Mark Merino — Fri, 26 Jun 2015 16:48:07 -0400

Student loans are just about the one think that cannot be included if you file bankruptcy. I would image it is because everyone would amass about $100,000 in student loan debt to become an underwater basket weaver and then claim bankruptcy. Doctors would get about $175,000 in debt, secure a position, and then claim bankruptcy as well. Which agency took her to court to enforce payment? My ex has a brazillion dollars in student loan debt and has no intention of ever having a job, let alone repay her student loans. This is confusing me. How can the ex get decades of 'undue hardship deferrments' with NO job, but tax exempt benefits from disability only means one has to repay? That's messed up.

Response by SPC Jan Allbright, M.Sc., R.S. made Jun 26 at 2015 6:39 PM

SPC Jan Allbright, M.Sc., R.S. — Fri, 26 Jun 2015 18:39:59 -0400

It ain't the judge ....

In 2005, President George W. Bush signed into law The Bankruptcy Abuse Prevention and Consumer Protection Act [BAPCPA] which no longer allowed debtors to discharge their private student loans. Prior to BAPCPA, student loans originating from private lenders could be discharged.
http://carybankruptcy.com/blog/are-student-loans-dischargeable-in-bankruptcy

Are Student Loans Dischargeable in Bankruptcy?Sasser Law Firm

Sasser Law Firm helps clients by specializing in bankruptcy law and litigation including chapter 7, 11, and 13. We are located near Raleigh/Cary, Wake County, NC.