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Student Loans: “When You’re in a Hole, Stop Digging,” Appeals Court Agrees

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    Student Loans: “When You’re in a Hole, Stop Digging,” Appeals Court Agrees

    "The Eighth Circuit Bankruptcy Appellate Panel upheld a lower court’s ruling discharging $204,525.00 in student loans, despite the lender’s argument that the debtor could have continued her education and sought higher-paying employment as a chiropractor.

    Shaffer v. U.S Department of Education, No. 12-601o (8th Cir.BAP Oct. 30, 2012), involved an unmarried debtor in her mid thirties who filed chapter 7. She started her undergraduate education at the University of Northern Iowa in 1994, and later enrolled at Iowa University, obtaining a degree in psychology in 2002. Afterward, she attended Kirkwood Community College off and on, in order to qualify under her parents’ health insurance.

    In 2007, the debtor enrolled at Palmer College of Chiropractic Medicine, but she left after thirteen months after concluding that her student loan debt was insurmountable.

    The debtor also suffered from depression, eating disorders, self harm in the form of cutting, and anxiety. In 2008 she commenced employment at a women’s health clinic, but left one year later. She next worked as an accounts receivable specialist at a different employer, but left after depression caused her to take two leaves of absence, believing she was about to be fired.

    The debtor then worked at a variety of temporary jobs, cashed in her pension, relied on the support of her family, and collected disability. She filed chapter 7 in 2010, and then began employment in the radiation department at the University of Iowa, making about $1,600.00 per month net pay.

    After receiving a discharge of debts in her chapter 7 case, the debtor asked the bankruptcy court for a ruling that her $204,525.00 student loan debt was an undue hardship under 11 U.S.C. section 523(a)(8). The bankruptcy court agreed, and the lender appealed.

    The federal appeals court upheld the bankruptcy court’s finding that after all the debtor’s monthly living expenses were paid, she had less than $100.00 left over to pay toward her student loans. This was “minimal” and not enough to make progress toward paying off the student loans.

    The appeals court also dismissed the lender’s argument that the debtor’s income limitations were self-imposed, because she could have stayed in chiropractic school. Eventually, the argument ran, she could have attained a much higher salary than her current $1,600 per month net pay. However, the appeals court accepted the debtor’s testimony that she had good reasons to leave chiropractic school based upon wanting to avoid additional student loan debt. The appeals court quoted approvingly from Will Rogers: “When you find yourself in a hole, stop digging,” and also Kenny Rogers, “You got to … know when to fold ‘em.” The student loans’ discharge was therefore upheld."

    i'm not putting this up as an article since i can't get the "site" to come up. but it was worth posting. this was written by by Craig Andresen, Minneapolis, MN, Bankruptcy Attorney
    8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

    #2
    I made a petition to get student loans disbursed in bankruptcy. Feel free to sign it to help me get it to the president.

    wh.gov/XDhX

    Comment


      #3
      Originally posted by tzimizie View Post
      I made a petition to get student loans disbursed in bankruptcy. Feel free to sign it to help me get it to the president.

      wh.gov/XDhX
      tzimizie, please do not keep posting the same thing in different threads. You could start a new thread under general bankruptcy talk.

      Also, if the petition can be edited, you may want to revise "disbursed" to "discharged". When petitioning the White House, it's a good idea to use the correct terminology. Also, your energy may be better spent by encouraging people to lobby their representatives in congress. I believe there is legislation stuck in committee (in the Senate, I believe) that would make student loans dischargeable.
      LadyInTheRed is in the black!
      Filed Chap 13 April 2010. Discharged May 2015.
      $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

      Comment


        #4
        Originally posted by LadyInTheRed View Post
        tzimizie, please do not keep posting the same thing in different threads. You could start a new thread under general bankruptcy talk.

        Also, if the petition can be edited, you may want to revise "disbursed" to "discharged". When petitioning the White House, it's a good idea to use the correct terminology. Also, your energy may be better spent by encouraging people to lobby their representatives in congress. I believe there is legislation stuck in committee (in the Senate, I believe) that would make student loans dischargeable.
        He didn't make it LIR. I escorted him to the door..........
        All information contained in this post is for informational and amusement purposes only.
        Bankruptcy is a process, not an event.......

        Comment

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