February 24, 2016
As I have discussed in the past, student loan debt forgiveness (discharge) in Bankruptcy is taken on a case by case basis.
An attorney with an MBA was able to discharge $264,000 in student loan debt since the Court decided that the debtor’s “dismal circumstances will persist.”
- 56 year old attorney (debtor) had $74,000.00 in student loans for his college, law school and MBA education
- Debtor paid more than $40,000 toward the student loan
- Debt grew to $264,000 with interest
- Attempts were made for 30 years to land a traditional legal job but mostly worked at contract jobs.
- Debtor lived frugally, had no assets and a minimal standard of living.
- Even if the debtor abandoned his legal career, it was doubtful that he could earn a better living in the future.
- If the debtor tried to take advantage of government programs, $700,000 could be written off and the remaining $450,000 when the debtor reached 80 years old.
- Student Loan was discharged for this debtor in his Chapter 7 Bankruptcy.
Discharge of student loans are possible; taken on a case by case basis.