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Must a Debtor Be Destitute Before Discharging Student Loans?

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Bankruptcy Co-Chair William Barrett Comments on Rising Cost of Student Loans

Following the favorable judgement on February 25, Barack Ferrazzano Bankruptcy & Creditor Rights Group co-chair William J. Barrett was quoted in the American Bankruptcy Institute's (ABI) article entitled, "Must a Debtor Be Destitute Before Discharging Student Loans?" for his representation of a pro bono client filing for Chapter 7 bankruptcy. 

With student loan discharges in bankruptcy being difficult to obtain, the law requires that the person seeking the discharge show that he/she will suffer an “undue hardship” if the loan is not discharged. Bill persuaded the court both that the existing standard as developed in case law was more demanding than what the statute required, and that in any event his client met the more severe standard. Bill told ABI, "It would have been cheaper for [the] Firm to pay off the student loans than to devote the time necessary for the client to win a discharge of the debt."

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