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Nov 2022

New! For Millions, Bankruptcy Help with Student Loans!

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Bankruptcy Can Now Help Millions with Student Loans!

Are you nine months or more behind on your student loans?  You are not alone. Typically, ten million Americans are at least nine months behind. And another million fall into that default category each year.  In early November 2022, the Biden Administration cast you a lifeline. For millions of people, bankruptcy can now help with student loans.

The Biden Didn’t Change the Law

The bankruptcy law says you can’t discharge–clear–your student loans unless you can show “undue hardship.”  Over the years, undue hardship came to mean “certainty of hopelessness,” paralyzed, never able to work again.  

Student needs bankruptcy help with student loans

Ten million American are more than nine months behind on their student loans. They may need to discharge their student loans in bankruptcy.

Biden Changed Government Policy

Last week’s announcement doesn’t change the law, but it does change government policy. The new policy is that the government will often help you if you come into court and try to discharge the student loans.  “In the interests of justice” they said, the government will recommend “that a bankruptcy court grant full or partial discharge of student loan debts in appropriate cases.” For the first time, instead of fighting tooth and nail, the government lawyers may be on your side.

Bankruptcy Help on Student Loans is Still Not a Sure Thing

Your student loan discharge is still not automatic.  We need to file a whole new set of papers–an adversary proceeding–to get it in front of the judge.  We need to persuade to the government to stay out or support you. And we still need the sign off the of bankruptcy judge, who has the final word.  

That’s why smart lawyers around the country are being very careful to start.  We want to begin with the really clear cases first–to get the government in the habit of helping and the judges in the habit of approving student loan discharges in these bankruptcy cases.  Then we can move on to some borderline ones.  

I joined a pop-up class sponsored by the American Bankruptcy Institute the next day after the changes were announced. And I’m registered next month for the three hour class by National Association of Consumer Bankruptcy Attorneys--0ur national group who patiently worked with the administration on this for nearly two years.  

I’ll post more info as it develops.


Update: Congrats to Ms Beruk and Attorney Nancy Ryan at LSNV

Attorney Nancy Ryan, of Legal Services of Northern Virginia, won the first case here under the new student loans in bankruptcy policy.  Actually, it may be the first in the country. 

Only two cheers for this success, however. The winner, Ms Beruk, might have been able to clear her student loans under the old rule–the rule that said undue hardship means never work again. She had an accounting degree but never got work in her field.  She was only making $12 an hour, before she got sick and became unable to work at all. 

The good news is she did win her case and discharge the student loans without the government putting up a fight.  But it does not tell us much about where the government draws the line now.  

The First Step Download your NSLDS student loan history file

How to Download Your NSLDS File from StudentAid.gov








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Robert Weed has helped fifteen thousand people file bankruptcy in Northern Virginia. Robert Weed is a frequent panelist and speaker at the meetings of the National Association of Consumer Bankruptcy Attorneys. He is one of Northern Virginia’s most experienced personal bankruptcy lawyers. As an expert on changing consumer bankruptcy laws, Robert Weed has been interviewed on local and national TV and quoted in newspapers across the country.