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Are there catch-all provisions in the federal bankruptcy code?

Although a change in employment status might necessitate a look at the protections offered by bankruptcy law, a recent story illustrates that other timetables might also prompt an inquiry. 

Specifically, the story profiled a recent law school graduate who sought to utilize an exemption under Section 523(a)(8) of the bankruptcy code. The provision provides for the discharge of student loan debt if the filer can demonstrate an undue hardship. Perhaps not surprisingly, courts are divided on whether student loans can qualify as an undue hardship. 

The recent graduate, an older student who is actually ten years from retirement age, found that he couldn’t get a legal job after graduation. He also has not yet passed the bar exam, despite three attempts. His law school debt is reportedly over $300,000.

Notably, the filer in this case represented himself. On appeal to the Seventh Circuit, the court actually paid the debtor a compliment for his capable legal skills. On that basis, the court determined that the individual had marketable job skills and that his future prospects weren’t hopeless. Given those hopeful prospects, the court concluded that his situation didn’t qualify under the undue hardship exception of the bankruptcy code

As a law firm that focuses on bankruptcy law, we know that there are certain provisions in the code that are not uniformly interpreted by courts across the country. This story is one example, but there are others. For someone considering the protections of a Chapter 7 or Chapter 13 filing, this should be good news. There may be special circumstances that could benefit from federal bankruptcy law. 

Source: Bloomberg, “Law Graduate Tries to Shed Debt in Bankruptcy,” Patrick Gregory, Nov. 23, 2015

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Goldman & Beslow, LLC is a Federal Debt Relief Agency by an Act of Congress. We have proudly assisted consumers seeking relief under the U.S. Bankruptcy Code for over 38 years.

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