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.
- Carl Rolsma