Bankruptcy Courts are Beginning to Consider Forgiving Student Loan Debt

The United States First Circuit Court of Appeals is considering the forgiveness of a Duxbury man’s student loan debt of over $200,000 he borrowed to pay the college tuition for his children. He is seeking bankruptcy relief since he lost his job and, according to his lawyers, his ability to repay the debt despite a 15 year failed job search, is extremely limited. While the borrower’s request was denied in US Bankruptcy Court because it was not considered an undue hardship, the First Circuit Court of Appeals is now considering his arguments. It is generally a rare occurrence for the Bankruptcy Court to forgive student loan debt but some judges have begun to recognize the scale of the problem, including U.S. Bankruptcy Judge Frank J. Bailey who told Murphy during a 2013 hearing, “I’m darn near in that situation myself.” The fear of forgiving such a debt in the past was that those who are merely temporarily unable to repay would take advantage of the ruling. Attorney David R. Chenelle forwards this Boston Globe article with more information: