Bryan P. Keenan & Associates, PC Toll Free 866-753-6857 Phone 412-923-4941

Providing The Advice And Options You Need To Overcome Financial Problems And Move Forward

Bankruptcy Attorneys Who Care About You And Your Future
Don't let debt problems disrupt and define your life.

Can I discharge my student loans?

The answer is complicated. Generally speaking, student loans are exempt from bankruptcy discharge unless the borrower can show undue hardship and the onset is caused by some exceptional circumstances such as a serious illness or permanent disability.

However, it can and has been done. Because many consumers believe student loans cannot be discharged through bankruptcy at all, they do not make an attempt. According to US News, in a 2011 study by Jason Luliano, 40 percent of those who did include student loans in their bankruptcy were able to have the debt discharged. While student debts are sometimes discharged, court decisions vary from state to state because "undue hardship" has not been clearly defined.

An attempt to define hardship

In October 2015, Robert E. Murphy took his case to the First Circuit Court of Appeals over the right to have his Parent Plus loans discharged. Murphy lost his six-figure income in 2002 when his longtime employer moved overseas. Even if he were to find a job and pay well past retirement age, the loans would still grow to half a million dollars with the interest--making it impossible for him to reasonably pay them off.

Murphy's counsel argued the court should clearly define "undue hardship" as it relates to student debt. Additionally, an attorney from the National Consumer Law Center submitted a brief supporting Murphy's argument. Many more kept a close eye on the case because it meant possible changes to how student loans would be handled in future bankruptcy cases.

What was the outcome?

The Court of Appeals is off the hook, for now, because the case settled earlier this year. Educational Credit Management Corporation, who assumed the debt from the Department of Education, agreed to let Murphy discharge his educational loans. Only time will tell if the bankruptcy court accepts the agreement, if it is sent back to the appeals court or if someone else challenges the definition in the future. 

No Comments

Leave a comment
Comment Information
Email Us For A Response

Contact Us Today

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Bryan P. Keenan & Associates, PC

993 Greentree Road
Suite 101
Pittsburgh, PA 15220

Toll Free: 866-753-6857
Phone: 412-923-4941
Map & Directions