Supreme Court Allows Student Loan Discharge
A San Jose bankruptcy attorney comments on this bankruptcy news regarding student loan debt...
A unanimous Supreme Court decision ruled in favor of a man who wanted his student loans dismissed through bankruptcy without having to prove that paying the money back would cause an "undue hardship." Generally, student loans are nondischargable unless a debtor can show "undue hardship" with regard to that debt in his/her bankruptcy filing.
It should be noted, however, that Clarence Thomas stated that the bankruptcy judge was wrong to approve Francisco Espinosa's bankruptcy plan in 1993, but the lender did not object at the time. Thus, the judge's error was not serious enough to undo the agreement.
The case itself involved a dispute over $4,582 in interest on Espinosa's four student loans. The case is United Student Aid Funds v. Espinosa, 08-1134.
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