Some bankruptcy judges look for wiggle room on student debt

[Peter1469]

Some bankruptcy judges look for wiggle room on student debt

It is pretty hard to use bankruptcy on student loan debt. Perhaps that should change. Banks would be more careful about who they lend too.

Some bankruptcy judges are showing more flexibility when borrowers seek to cancel student debt.

Though few judges are canceling the debt outright, some are encouraging lawyers to offer pro bono help and others are trying to ease repayment amounts, the Wall Street Journal reports. Its story is based on interviews with more than 50 current and former bankruptcy judges.


As judges grow more sympathetic, more lenders are willing to reach settlements with borrowers, some lawyers report.


Some judges are influenced by the situations of their own children who are saddled with education debt. Some are learning about heavy debt loads from their law clerks. The Wall Street Journal cites a figure from Law School Transparency: The typical law student has $119,000 in loans.


Vanderbilt law professor Terry Maroney, who studies judicial decision-making, told the Journal that frustrated judges are more likely to “look for wiggle room and try to find solutions that will allow them to sleep at night.”

[MisterVeritis]

Some bankruptcy judges look for wiggle room on student debt

It is pretty hard to use bankruptcy on student loan debt. Perhaps that should change. Banks would be more careful about who they lend too.

The federal government is at fault. The federal government should have no role to play in student loans. Nor, for that matter in education.

[Common]

Bill Clinton made it almost impossible to bankrupt student loan debt with his bankruptcy reform bill. The bill restricted personal bankruptcy while leaving business bankruptcy intact

[Peter1469]

Both of you are correct.

[DGUtley]

I think the TRA-1986 is the one that made student loans non-dischargeable. I just say that b/c in law school everyone talked about how they'd blow them out and then there was panic after the law changed. Easily-available money has contributed to the rising cost in education - and massive debt.

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