"Bad Faith" Shown with not Utilizing One's Degree

[anonymuse]

I was reading a quarterly law update in Colorado BK.

Some guy was trying to get out of his student loans only 3 years after getting his master's degree maintaining an undue hardship. They stated that he was healthy, well-educated, and employed and the debtor had not tried to minimize current household expenses.

Now, this is the part that bugs me: "The Court also found that the debtor was not actively maximizing his personal and professional resources, including attempts to find work in his field, to obtain a higher paying job, and was not willing to relocate to obtain a higher paying job."

I know this only applied in this case for someone trying to weasel out of their student loans, but that statement burns my butt!

I have a master's degree (which I'm only going to reveal if asked now). When I was part of an "involuntary resource reduction"--or as Trump would say, "You're Fired", 700 of us were dumped into the local workforce after 1,000 from the same company were dumped the previous year. A few other tech businesses folded and before we knew it, there were over 5,000 dumped within a very short time period into a saturated market.

I went from job interview to job interview hearing the word "overqualified" one too many times along with "we can't afford you" before even asking my past salary and current salary requirements. The only jobs that would maintain my last salary would require 85-100% travel, and, physically and mentally, that was something I just could not do anymore (I had done that for about 3 of my 10 years at the other company.)

Has anyone ever heard of this [not utilizing one's degree] being used to deny someone their BK request stating that they should be making a better monthly income?

P.S. Jane, hope you read this since I know you're in the same boat with "over-educated".

[debtisbad]

anon,

They might say the same about me. I have a bachelors degree with 2 majors. I received my degree in the 1980's. However, with current outsourcing and downsizing, my degree is not relevant in today's workplace. Therefore, I am going back to school to get another degree. I just got my acceptance letter today incidently! Because of the state of our current economy, I have to attain another degree to make myself more marketable. So, this statement, could apply to me. Also I know some MBA's that are going back to school with me, who cannot get jobs. It does not make sense to me that this statement could be said. However, I know they will not excuse student loans. So what is your masters degree in?????

[no_it_all]

Has anyone ever heard of this [not utilizing one's degree] being used to deny someone their BK request stating that they should be making a better monthly income?

Nope. But I suppose a highly qualified person that was taking say, a year off of work as part of pre-bk strategy could <concievably> be wacked by it. An example would be a physician taking a year off to lower income and get that big honking malpractice suit discharged....

[SinkingFast]

That would only work, or be necessary, if the plaintiff proved the injury was willfull and malicious. Otherwise, the malpractice insurance would pick up the award tab and the physician would go his/her merry way with higher malpractice premiums.

Willfull and malicious injury claims are not dischargeable in Ch 13. The physician would have to put themselves in a position to qualify for Ch 7.

Which a willfull and malicious injury claim would probably be the least of the physician's worries. Most probably loss of license to practice medicine. Maybe jail time. Those might surface way before the need to file BK could possibly come to mind.

[Minnymouth]

In our society today a college education does not guarantee you the "good job - the big bucks"!!!
Many a college educated person is flipping hamburgers at McD's trying to get hired into their field of expertise.....
Many who have degrees from 20 or 30 years ago are having to go back to school because their degrees are "outdated"......
Many with degrees are suffering from job losses, downsizing of companies, relocating of companies, etc.....

For the bankruptcy court to penalize a college educated person for "not using their education" is a sad thing. Next they will be penalizing us for being "sick" or loosing our jobs, or having a hurricane sweep over us......

Also I agree that its "fraudulant" for a person to graduate then try to file a hardship case to sweep their student loans under the rug so they don't have to pay them back.... Hardship cases are very hard to win in bankruptcy..... and especially if 'THERE IS NOTHING WRONG WITH THIS INDIVIDUAL"......

My thoughts

[anonymuse]

I'm just hoping that they're pushing this when people are claiming "undue hardship" to get out of student loans. (Seems most of the opinions published in our state have to do with people trying to get out of student loans--I've only seen one that was successful and it sounded like this mother more than deserved it.) I remember reading once where someone had an advanced degree, but instead decided to "be one with the land and nature" and was making about $7,000 a year making custom bracelets, and for some odd reason, they couldn't get a hardship discharge either.

I understand the courts taking a stance about people trying to get hardship discharges. But the reasons for the denial really should have had nothing to do with their perceived use of their degree. It's based on your physical and mental capacity to hold gainful employment (i.e. whether you are on disability), whether this situation is permanent, and your previous attempts to pay off the loans. That was enough to deny this person their "undue hardship discharge" without the comment on their degree.

DebtIsBad, I have 2 masters degrees. One is in Communications and the other in an Allied Health Science field. To really be able to do anything with my type of Health Science field, I would need a PhD. My first job out of grad school wasn't even in either field. Instead, it was a well paying staff level techie job that lasted 7 years. The skills I developed while working during grad school were probably more important than the actual degrees themselves.

[FoolAndHisMoney]

I always thought that paying the full cost of college is a big waste. While easier said then done scholarships and probably the GI bill would help with this expense. Maybe working for a company even in a crap position with tuition reimbursement.

A few weeks ago I watched on 60 minutes how some people, probably some of you are in debt for close to or even more then six figures. I can't see doing this because after doing the math it would take almost an entire lifetime to pay down some of these loans with all the interest. Some analysts argue that "investing" that much in college will give a return, but I'm beginning to doubt that.

As for the bankruptcy courts they probably feel that "if you can't afford it don't borrow to go". In some cases I agree with this. Less people will go to private college and the prices will eventially fall.

[debtisbad]

Fool,

I agree with you. There is not as much return on investment today by going to college. I am going back this fall, however, going to a local community college where it is much less $$. I checked out the private schools and tuition alone runs about 17k per year. I need to go for 2 years. I know people here who are over 100k in debt with student loans to get their education. They went to the "prestigious" colleges such as Vanderbilt and Duke. The reason college has gone up so much are the numbers of foreign students entering. Try getting in UGA today. Need a 1600 SAT. Just like the rest of our society, way too much competition, and lots of people have the funds whether borrowed or not.

[SinkingFast]

The day Hubby got laid off, there were half a dozen Pharmaceutical Scientists from his group in that room. Varying degree levels and over 100 years combined Pharmaceutical Research experience being tossed to the curb.

We had to move. Hubby could not find a job in the Kansas City metro area. Not even anywhere close to drive back and forth short term to give us a chance to sell the house.

There are some skilled professional, college degreed jobs that you can walk down the street and get hired elsewhere. Nurses. Computer geeks. Those are a couple. But many, many others, the markets are so specialized or the fields are super saturated with candidates, that it's next to impossible to find a position.

You ask me, Trades and Crafts are looking pretty good.

Our next door neighbor in Missouri was a carpenter. The man was never outa work longer than he wanted to be. When he is laid off on unemployment, he takes the unemployment and picks up odd jobs for cash on the side until he wants a full time job again. He's never had to move.

[aa06a47]

I think the ruling was because he was claiming a hard ship to not pay the student loans back. I can see and understand the courts ruling to some extent. Say, you have 200K in student loans you got to become a doctor. You decide not use you medical degree and instead take a job making 25K a year at the local 7-11......so you file BK on the 200K in student loans. I don't think it is for the average person who get's laid off and work is unavailable. If it is unavailable, you should be able to prove this.

[Minnymouth]

Even though I have some college under my belt (many years ago) + refresher courses over the year..... it is still very hard to find a job in YOUR FIELD....

SOOOOOO, it's a good thing I am qualified in many other areas of the labor force. Being a "jack of all trades" and a "master of a few" I have never been unemployed more than 2 weeks and that was too move to another job.......

I guess I have done it all at one time or another in the last 45 years just to survive.....
1. casher, produce (grocery store) - parttime - 8 years
2. night auditor and desk clerk(motels) - parttime - 8 years
3. Restraunts - waitress, cooks, assistant manager, manager, transit manager - 10 years
4. Factory - welder - 2 years
5. Factory - data entry and quality control - 8 years
6. Secretary/legal - 4 years
7. Social services - 4 years (parttime)
8. Mobile Home Park Manager - 4 years (parttime)
9. computer specialist/Assistant to Director - 20 years - 10 years on present job
10.caregiver - 4 years

Guess being a jack of all trades has saved my life over the years, and kept me employed.

Many jobs were full-time jobs with a parttime job on the side... 6 years was a transit job (manager)- on the road.

College education was in the fields of business law, management, and computer specialists/programing.

Don't get me wrong, have used that college education, many times..... yet many times proved to be useless in finding employment....

I'm afraid our economy in the future is going to be in such shape that a college education will often "hinder" someone that really needs employment just to feed their families. The days of the "top dollar" jobs are disappearing and companies are downsizing, moving overseas.....

Most people have to "cross-train" in other fields just to pay the bills.....

My thoughts,

[anonymuse]

In this opinion they showed tests used by different circuits for determining undue hardship.

(Second Circuit) The three-part Brunner test required the debtor to prove:

1) That the debtor cannot maintain, based on current income and expenses, a minimal standard of living if forced to repay the student loans;
2) That additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and
3) The debtor has made good faith efforts to repay the loans.

Under the Brunner analysis, if the court finds against the debtor on any of the three parts, the inquiry ends and the student loan is not dischargeable.

Under the Eighth Circuit totality of circumstances test, the Bankruptcy Court should consider:
1) The debtors past, present, and reasonably reliable future financial resources;
2) A calculation of the debtor's and the debtor's dependents reasonable necessary living expenses; and
3) Any other relevant factors and circumstances surrounding each particular bankruptcy case.

[anonymuse]

This is providing some interesting reading on the web. One court discharged the debt of a woman working in her "dream job" as a decorative painter. In the first 2 years of her business, she grosses less than half of what she had earned in her tourism industry job. She refused to consolidate her loans or take the income contingent repayment option where her payment would have been zero. The lower court discharged her loan, but the student loan company appealed. They called her status a "debtors' voluntary lifestyle choicecertainty of hopelessexceptional circumstancesneeds to demonstrate something more than tight finances. Finally, the court stated that a debtor who fails to apply for a consolidation program that offers an income contingent repayment option without justification is unlikely to get her loans discharged from a bankruptcy court. ECMC v. Frushour, 433 F.3d 393 (4th Cir. 2005). "

If this women had consolidated, her payment would have been between zero and five dollars per month unless her income increased. She would be obligated to make payments for 25 years, but at the end of that period her remaining debts would be discharged. Who in the world can't afford $5 a month?

[debtisbad]

Sinking,

That is exactly why I am going back to school in the med field. Just got my acceptance letter. You know the college I am going to. Its our community college. Branches all over the state. I can't afford Purdue! I gotta do the science courses over the summer. Yikes!

[anonymuse]

I had scholarships that financed my whole undergraduate career; however, knowing what I know now, I would have a child of mine (if I'm ever fortunate enough to have one) spend their first two years at a community college getting their prerequisites done, and then transfer to a four year school.