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Sometimes You Can Discharge Student Loans in Bankruptcy: Some Good News!

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Defaulted student loans have been in the news quite a lot lately, with reports saying that the total exceeds the overall credit card debt of Americans! The tragedy that accompanies that is the fact that these debts, unlike credit cards, are extremely hard to discharge in bankruptcy. The only avenue available is to prove "undue hardship." However, every once in a while, there comes a glimmer of hope.

That happened recently in a bankruptcy case in Maryland where a 63-year-old woman with Asperger's Syndrome (a condition on the autism spectrum) was able to discharge over $300,000 in student loans! The woman, Carol Todd, began attending the University of Baltimore School of Law in 1992, but never graduated. She later obtained a master’s degree from Towson University and a Ph.D. from an unaccredited online school. Unfortunately, according to Todd, after obtaining them she was unable to get a job due to her disease. The judge wrote in her opinion, that,

“to expect Ms. Todd to ever break the grip of Autism and meaningfully channel her energies toward tasks that are not in some way either dictated, or circumscribed, by the demands of her disorder would be to dream the impossible dream.”

Wow! A judge with some common sense and sympathy for the plight of many people being crushed by student loan debt! Although as a trial court opinion it has no authority in other courts, it does show at least one bankruptcy jurist using a permanent disability as a basis for undue hardship. Hopefully, this will influence courts here in New Jersey should a similar factual situation arise.

If you live in southern New Jersey, have a large amount of student loan debt that you are unable to pay, and do not expect ever to be able to (especially if you are disabled), please call my office at 856-432-4113 or contact me through this site for a free consultation to discuss your case. You may just be able to get out from under it!

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