Law Office of Allan E. Dunaway, PLC

Yes, they really made those arguments

While bankruptcy has many causes, in recent years, student loans have garnered attention for their uneasy relationship with bankruptcy. Many clients here in Louisville recognize that they generally cannot discharge student loans in bankruptcy. What many of them do not recognize is that there may be circumstances where the loans may be subject to discharge.

The standard used by the bankruptcy courts in Kentucky is "undue hardship." The standard, while daunting, is sadly becoming more easily met, as more debtors are stuck in low-wage jobs. If they have accumulated a significant amount of student loan debt, and have only been able to secure employment in low-wage occupations, there is a very real possibility that they may never be able to pay the loans off.

Even the Wall Street Journal raised its eyebrow at some of the arguments used by attorneys for the loan servicers. One case involved a Kentucky woman who dropped out of a culinary arts degree program due to problems with a pregnancy.

She was 26, and earning $9 an hour with two children. The loan servicer's attorney blithely noted that she was in "prime" of her earning years, and had many years to left continue earning that "prime" salary. Of course, having children age 1- and 2-years-old to care for, rent to pay, food to buy and transportation expenses to cover, all on $1560 per month could be somewhat tight.

Another case involved the loan servicer's attorneys arguing that a man with $130,000 in loans, who earned $12.41 an hour, didn't really need to take anti-depressants. They further argued that he should drive 800 miles to obtain them at a lower price.

If you are drowning in a sea of student loan debt, speaking with a bankruptcy attorney is probably a good idea. Every case depends on its facts, so having an attorney review your financial situation is the best way to determine if bankruptcy could help with your student loans.

Source: Wall Street Journal, "5 things student loan lawyers ask borrowers who file for bankruptcy," Katy Stech, January 6, 2013

No Comments

Leave a comment
Comment Information
Contact the Firm

Get Sound Advice In A Free Consultation

For sound bankruptcy advice you can count on, from a skilled lawyer who truly cares about your future, contact the Louisville Law Office of Allan E. Dunaway, PLC. We have two convenient locations: Louisville, Kentucky, and Jeffersonville, Indiana. Our main office in Louisville is located off the beaten path so you won't have to deal with downtown traffic and can pull right up to our door and walk right in.

Call us at 502-785-1005, or send an email message. Our law firm welcomes the opportunity to serve you in any way we can.

If for some reason personal bankruptcy is not for you, if you do not qualify for the Chapter 7 approach via the "means test" and Chapter 13 reorganization is not the answer, Allan E. Dunaway works hard to inform you of other appropriate means of debt settlement that suits your unique needs.

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Kentucky Office

Indiana Office

714 Lyndon Lane
Suite 4
Louisville, KY 40222

Phone: 502-785-1005
Fax: 502-412-2258
Louisville Law Office Map

530 East Court Avenue
Jeffersonville, IN 47130

Phone: 502-785-1005
Fax: 502-412-2258
Jeffersonville Law Office Map