I Made My Case on Undue Hardship and Discharged $130K in Student Loans in Bankruptcy


It is a fact! My efforts and hard work were what made the difference. I am proof that 11 USC §523(a)(8) “undue hardship” still is a valid means for seeking and winning a full discharge within the U.S. Bankruptcy Court.

On February 18, 2016, the court filed the order signed by the Judge granting the Consent Order – dismissing my student loan debt. Here is the long and short of that order for you to see:

Case 15-01167-RGM Doc 31 Filed 02/18/16 Entered 02/18/16 15:08:56

THIS CAUSE is before the Court on the request of the Plaintiff, Richard Allan Precht (“Plaintiff”), and Defendant, the United States Department of Education (“DOE”). The Court being advised herein that the DOE agrees that Plaintiff’s loans held by DOE at issue in this adversary proceeding should be discharged in bankruptcy pursuant to the provisions of 11 U.S.C. §523(a)(8) , and that upon entry of such relief the Plaintiff seeks no further relief in this adversary proceeding. Accordingly, it is hereby ORDERED and ADJUDGED as follows:

1. The loans of Richard Allan Precht at issue in this adversary proceeding held by the United States Department of Education are HEREBY DISCHARGED in bankruptcy pursuant to 11 U.S.C. ¶ 523(a)(8).

2. The above-captioned adversary proceeding is hereby dismissed.

3. The clerk will mail a copy of this order, or give electronic notice of its entry, to the parties listed below.

Date: Feb 11 2016

/s/ Robert G. Mayer


If you are struggling with your federal student loans, there is hope for you. But as I have said many times already, you have to work very hard to accomplish a discharge through the bankruptcy court.

I titled this blog “Undue Hardship – Poverty Required” because that is what I felt when I began to research what the term undue hardship meant, and just how one must prove undue hardship to a judge in a bankruptcy procedure. My study of several hundred, perhaps a thousand, cases of debtors with student loans nearly discouraged me from pursuing a discharge!

But as I continued to research and read and re-read cases, I learned that there were many hundreds of people who were successful. I also learned that there were hundreds who were not!

The thing that struck me the most was that there was no consistency! Zero! The fact remains today that every court that rules on a discharge of student debt, can decide the outcome for or against primarily on the conviction of the judge.

I say that because there remains a huge discrepancy in the way courts and judges have over the years, interpreted the meaning of undue hardship. I wish I had the time to go into all the facts and details, but suffice it to say, that during my nearly one year of educating myself on the subject I discovered that the courts are left to decide what the term means and can – and have – decided cases based on undue hardship without a clear and direct interpretation of that clause.

One only has to do a quick search of USC 11§523(a)(8) in the web to see what I am talking about. When you do you will learn that even the congress who wrote the language for what became the rules that prevented student loans from being discharged in bankruptcy, did not provide an interpretation of the phrase “undue hardship”, but left it up to the individual courts to determine what constituted undue hardship.

When you consider the number of bankruptcy courts across the USA and the number of Judges there are, it is no wonder there has been great confusion, and great differences in the rulings for and against student loan debtors.

Take the word “undue” for example. There are many definitions for that word. The usage that congress assigned to it to describe the word hardship, probably is considered to be “beyond normal limits” that has synonyms of “excessive”, “inordinate”, and “unreasonable”.

Hardship is another word with several meanings. One site I checked for the word hardship had these three key descriptors: 1) Something hard to endure 2) Something that causes or entails suffering and 3) A state of misfortune or affliction.

Interestingly the synonyms for “a state of misfortune of affliction” on that site are “adversity” and “hard knocks”, both of which in many cases describe the state of affairs student loan debtors with no way out could relate to. I was there.

My life was one full of misfortune, afflictions, adversity, and I took a lot of hard knocks! And I will tell you that what I endured was way beyond normal limits, excessive, inordinate, and unreasonable to put it mildly!

So…. Just how did I win in court?

Yes I won a huge victory in court. I won big mainly because I persisted in finding out what steps and actions were needed to get out from under that $130K debt. Desperation drove and motivated me.

Having both my social security and small federal retirement incomes being garnished to pay only a fraction of the ever increasing interest on my consolidated and defaulted loan was foolish. There was no way I would ever pay it off; not on $1,200 a month, and being 67 years old with health issues and unable to work.

After months of preparation, I took the 1st step required by the rules of bankruptcy to rid myself of this monster. The first thing one has to do is to file a consumer debt chapter in a U.S. Bankruptcy Court. I had roughly $3,100.00 in unsecured debt that I was unable to pay. To bankrupt those debts, I filed a personal Chapter 7 with the local U.S. Bankruptcy Court.

Filing a Chapter is quite simple – and like I have said before this was my third personal bankruptcy in my life. I also helped a friend file a chapter 7 about two years ago. It is not difficult and you do not need a lawyer so save yourself the money. You can also request a waiver of the filing fees and basically file a Bankruptcy Chapter for free.

All of the forms can be found online; many of them are fill in-the-blank PDF forms that you can print out and file with the court. Just search online for the closest bankruptcy court to where you live. You may find a “checklist” included which will help you in the process. Additionally, many courts have their own “local court rules” which you need to read and follow. I found the local bankruptcy court extremely friendly and helpful. Just be confident!

Once you fill out all the required forms, and have all the required records (i.e. bank statements, proofs of income, etc.), go to the clerk’s office of the U.S. Bankruptcy Court in your locale, and have the clerk look over your forms, the clerk will tell you if you have done everything correctly. When you have it all together, you will file your documents with the clerk.

When listing your debts under “unsecured non-priority” you also list your student loan debts. However, those student loans WILL NOT be discharged under the Chapter! What will happen is that when you attend a mandatory court hearing called the “Trustees Meeting” the trustee (a court appointed mediator) will tell you that under bankruptcy chapters you cannot get your student debts discharged! This is where educating yourself comes into play!

If the opportunity presents itself, you advise the court or the trustee, that you understand that you cannot have your student loans discharged without filing an Adversary Proceeding and that you are prepared and ready to do so!

Remember I stated “So…. Just how did I win in court?” I will tell you. I won because I prepared a case before I filed my Chapter 7, and I spent months doing that preparation!

Before I filed my Chapter 7, I had already written my “complaint” the formal legal pleadings which you must make to prove “undue hardship” that constitutes what the court calls an Adversary Proceeding. My rough definition of that term is you are “Adversely Affected by an Act of Another and Need Justice.” In this case you are filing a formal complaint against the U.S. Department of Education, and all holders of your Federal Student Loans (private loans are different). The formal complaint is the Adversary Proceeding (AP).

Next time I will describe more details about what an Adversary Proceeding entails. My AP was 56 pages long, 202 paragraphs. It took me several weeks to write, but it proved to be the “winning ticket” to discharging close to $130,000.00 of student loan debt!

This article by Richard Precht first appeared on Undue Hardship – Poverty Required and was distributed by the Personal Finance Syndication Network.