October 23, 2016
As I have discussed in the past, student loan debt forgiveness (discharge) in Bankruptcy is taken on a case by case basis.
Facts:
- 63 year old Chapter 7 Debtor was a cancer survivor.
- $43,253 in Student Loans
- U.S. Department of Education advised her to take advantage of the income-based repayment options to her (ICRP Program).
- Debtor had been unemployed but was now looking for work.
- Owned car and home but both needed significant repairs.
- Debtor had not purchased new clothes in almost a year, did not have health insurance and had not purchased a significant appliance in over 10 years.
- Debtor lived frugally.
Court Findings:
- If Debtor participated in the student loan repaying program at for 25 years at age 63, she would face tax liability at age 88 and would be an undue hardship.
- More likely than not, debtor would not be able to find a job and only income most likely would be $800.00 per month Social Security.
- Court looked at the totality of the situation.
- Did not require debtor to participate in the U.S. Department of Education’s repaying program as they suggested.
- Student Loan was discharged for this Debtor in his Chapter 7 Bankruptcy.
Discharge of student loans is possible; taken on a case by case basis.
