A recent MarketWatch piece by Jillian Berman did a great job of not only naming a bunch of attorneys I’m proud to call friends, but debunking this myth that there is nothing that can be done about student loans in bankruptcy.
I get so frustrated when consumers tell me they went to a bankruptcy attorney and was told there was no hope for dealing with their student loans, when there clearly was.
The article quotes four attorneys who all make the same point, there are legal options for dealing with student loans in bankruptcy. Don’t believe everything you’ve been told that there are no options – That’s Fake News! Want to learn more, here you go.
Attorney Richard Gaudreau is mentioned, “Nobody is doing anything for these people in terms of laws to benefit them,” said Richard Gaudreau, a New Hampshire-based bankruptcy attorney, who’s been working on student loan issues for the past few years. “We’re just forced to be creative.”
And when he says creative, what he’s really saying is applying some brain power and creative thinking to look at the law under new light to find where is already applies to dealing with student loans.
That’s what attorney Austin Smith is doing, and winning.
“Taking that logic one step further means that student loans from private lenders can be discharged in bankruptcy if they were made to students who didn’t attend an accredited program or were lent more money than the cost of attendance. Possible debts that fit into this category could include the aforementioned bar study loan or a loan to attend an unaccredited trade school, Smith said.
“A loan is not like a scholarship or a stipend and such a private loan cannot be included in this definition. If I were to interpret educational benefit to include loans that has some relation to attaining an education, it would render the other two provisions of [the bankruptcy code as it relates to student debt] totally superfluous,” the judge said, according to a transcript.
“I have yet to go in front of a judge who disagrees with my overall thesis, which is that not all student loans are not dischargeable,” Smith said. “I do think the tide is now turning on that.”
Then there is attorney Lewis Roberts, “Roberts’s intervention is to get judges and trustees to classify the federal student loan debt separately so that his clients can take advantage of special payment plans the government offers borrowers to manage their student loans.”
Attorney Jay Fleischman said, “This fight is just in its infancy,” he said. “We’re seeing the birth of it in many ways.”
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