This student loan borrower received a $ 178,000 student loan cancellation from Navient.
Here’s what you need to know – and what does this mean for your student loans…
A 68-year-old student loan borrower received a $ 178,000 student loan debt that was settled in a US bankruptcy court in Maryland. Terry Randall owes more than $ 500,000 in student loans, including $ 190,000 to Navient, one of the nation’s largest student loan service centers. Despite several graduate degrees, Randall has worked in a job that was paid $ 13 an hour for the past few years. After paying living expenses and even overtime work, Randall says she doesn’t have enough money to pay off her student loans. Defendant Navient disagrees and says that Randall is able to work and pay off at least part of her student loans. Randall argued in court that repayment of student loans created unreasonable financial hardship… So Randall, the debtor of Chpater 7, filed a lawsuit in bankruptcy court to pay off her student loans under section 523 (a) (8) of the US Bankruptcy Code. Court ruled in favor of Randall. Why?
Cancellation of student loan is possible in court
There is a general assumption that student loans cannot be repaid in the event of bankruptcy. The US Bankruptcy Code treats student loans differently from other consumer debts such as credit cards or mortgages. However, a student loan borrower can overcome this assumption. When a court is considering paying off a student loan, the court must examine all of the evidence presented. For example, it is not enough just to say that you cannot pay off your student loans. In this case, the U.S. Bankruptcy Court applied a legal standard known as Brunner test, which is the official test in all district courts except the 8th and 1st arrondissements. Thus, the majority of student loan borrowers who are looking for student loan cancellation in bankruptcy must comply Brunner test. The court found that Randall satisfied all three pillars. Brunner test:
- the student loan borrower has extenuating circumstances creating difficulties;
- these circumstances are likely to persist throughout the term of the student loan; as well as
- the borrower has made a good faith effort to pay off the student loan.
The court concluded that it would be unwise to force Randall to work more than her current hours and overtime. Why? The court found that even with the extra hours, Randall does not own large assets, tries to work, and does not have excessive expenses. Interestingly, the court did not allow Randall to completely cancel the student loan. Rather, the Court found that Randall could afford to pay off at least a portion of her student loans, namely $ 12,000, which means that the Court granted the partial cancellation of the student loan.
Another win in case of student loan cancellation, but has the burden of student loan cancellation become more difficult?
This win in student loan cancellation comes at a critical juncture. Why? The US Supreme Court recently declined to consider student loans, bankruptcy and student loan cancellations.… As a result, a ruling in the case in the United States Court of Appeals for the Second Circuit could make it Student Loan Borrowers More Difficult To Achieve Student Loan Cancellation In Bankruptcy… IN TinglingThe Second Circuit is the same court that created Brunner standard – confirmed rationality Brunner test and that there is a high burden on student loans in the event of bankruptcy. This has important legal implications because it signals to student loan borrowers that canceling a student loan is not easy. This is potentially bad news for student loan borrowers who were hoping the Second District could ease the application Brunner test so that more student loan borrowers can get student loans discharged as a result of bankruptcy.
What does this mean for your student loans
Will your student loans be canceled? Some student loan borrowers feel student loan cancellation canceled and all hope faded. Others say student loan cancellation is alive and well, especially since President Joe Biden Cancels $ 3 Billion Student Loans since he became president. In reality, it is still possible to obtain student loans after bankruptcy. In addition to Randall, the veteran of the Navy paid $ 220,000 of his student loans, and the doctor canceled $ 430,000 of his student loan. However, this is in contrast to the student loan abolition that most student loan borrowers aspire to: a large-scale student loan abolition. Senate Majority Leader Chuck Schumer (New York State) this week renewed his call for Biden to cancel his $ 50,000 student loans. However, New research shows that large-scale student loan cancellations can disproportionately benefit wealthier student loan borrowers.… While there is no guarantee that the large-scale student loan will be canceled, student loan borrowers will receive Cancellation of over $ 90 billion student loan when the student loan exemption ends on September 30, 2021. Although it is possible Biden May Extend Student Loan Benefit After Sept 30 – and to ensure more frequent cancellations of about $ 5 billion a month on student loans – Biden made no announcements.
If you have student loans, make sure you understand all the options for paying off student loans. Before pursuing the goal of bankruptcy, first consider these popular options: