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According to Yahoo News, a 35-year-old man had his $100,000 in student loans discharged by a bankruptcy court in Delaware 2 weeks ago. The Debtor represented that "he struggled to find a full-time job after graduating college in 2010, and nine years later, when working full-time for ride-hailing services, he had a seizure and totaled his car." The judge decided that the Debtor met the standards for an "undue hardship" needed to qualify for the discharge of student loans in a bankruptcy. Will the Debtor ultimately prevail? It seems that he will, for although the U.S. Department of Education filed a notice of appeal of the decision, The Daily Poster reported a few days later that the Department has now announced that it is withdrawing its appeal. The history of decisions on this issue has set a high bar for those wanting to get a discharge of student loans in a bankruptcy. The Yahoo News article goes on to point out that there has been movement in both the U.S. Senate and the U.S. House of Representatives to make it easier to get student loans discharged in a bankruptcy. This seems to indicate that Congress does not believe there is currently a statutory basis for allowing courts to ease the undue hardship standard. It is hard to know at this point whether the Delaware case is a harbinger of things to come in other bankruptcy courts around the nation or whether it is just an outlier.

Although the pandemic has caused widespread economic disruption and financial hardship, to the surprise of some experts this has not been accompanied by a rise in personal bankruptcy filings. On the contrary, the Wall Street Journal reports that Chapter 7 personal bankruptcies fell 22% in 2020. The likely explanation for this unexpected drop is simple: many Americans have lost their jobs, but stimulus payments, eviction moratoriums, and student loan suspensions have eased some of the financial pressures that often prompt people to seek out bankruptcy.


Still, the Journal reports that economists expect this sort of financial relief will be only temporary for many. Future stimulus payments are unlikely and eviction moratoriums do not prevent past-due rent from piling up. Were you considering bankruptcy but these pandemic-related policies have been keeping you afloat for the past months? If you worry that bills will start coming due again and think bankruptcy might again be the right choice, please give us a call or submit a free bankruptcy evaluation.

New Means Test numbers are out for bankruptcies filed on or after 11/1/2020. All of the median income numbers are going up for Wisconsin as follows:

  • 1 person household goes up from $52,730 to $54,660;

  • 2 person household goes up from $68,363 to $72,171;

  • 3 person household goes up from $83,607 to $87,353; and

  • 4 person household goes up from $100,098 to $103,708.

  • (Add $9,000 for each household member above 4.)

These are significant increases. The last time these numbers were changed we saw an average increase of $1,356 for the households of 1 through 4. This time they average a change of $3,273.50. This will make those Debtors who were just missing out on being able to file a Chapter 7 because of Means Test issues now able to do so. For Chapter 13 Debtors it may significantly reduce the amount required to be paid on unsecured nonpriority debts in their Chapter 13 Plan. If you are considering bankruptcy, call us to find out if these new numbers will be beneficial to you.

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