Is Student Loan Discharge in Bankruptcy Now Within Reach? – Mooresville Tribune

Anna Helhoski, NerdWallet

Student loan borrowers who seek to have their debt canceled in bankruptcy what's known as discharge typically find it an expensive process with standards that can be difficult to meet. But recent bankruptcy court rulings and lawmakers' support of relief for overburdened borrowers may signal a change is coming.

In January, a New York court discharged over $200,000 of student loan debt for one borrower. Then, in August, a federal appeals court ruling eliminated $200,000 for a Colorado couple who held 11 private student loan accounts. And inSeptember, a New York judge ruled to enforce a prior bankruptcy discharge of a borrowers $400,000 of federal student loans that a servicer had failed to carry out.

These decisions could serve as a precedent for future bankruptcy cases involving student loans, says John Rao, an attorney with the National Consumer Law Center.

"A lot of people, even some of the lawyers who represent consumers, thought for years that you really shouldnt even try because there's not a chance youll win, but I think everyone is looking at it now with sort of a fresh look," Rao says.

Courts arent the only example of potentially easing standards. The House of Representatives recently took up a bill that would expand bankruptcy relief to more student loan borrowers. And the platform of former Vice President Joe Biden, the Democratic presidential candidate, included a bankruptcy reform proposal to end rules that make it "nearly impossible" to discharge private student loan debt.

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Is Student Loan Discharge in Bankruptcy Now Within Reach? - Mooresville Tribune