Welcome to Case Chronicles, where we tell the stories of people who received student loan debt relief via adversary proceedings.
All information in Case Chronicles is from the public record, but we have changed any names to provide some privacy.
Elizabeth eliminated $112,000 of student loan debt in bankruptcy. This is her story.
When Elizabeth pursued a highly-specialized degree to equip her to teach special education at a public high school in rural America, she was told she would be able to work off her student loans by applying for loan forgiveness programs. More than a decade after completing her PhD studies and well into her career as a special education high school teacher, however, she was left with more than $112,000 in student loan debt and a mountain of denial letters from student loan forgiveness programs.
This lack of relief was devastating since Elizabeth, a single mother of two children, was taking home less than $3,000 per month from her job as a high school teacher. Even with the additional $500 she received in child support to help with raising her two sons, she was not making enough money to cover her family’s modest living expenses and pay off her student loan debt. The math didn’t work out, but that didn’t stop Elizabeth’s lender from demanding that she allocate $915 of her $3,500 monthly income to repay her student loan.
Desperate for relief, Elizabeth filed bankruptcy in 2012. Eight months later, after she had already received discharge for her other debts, Elizabeth filed an adversary proceeding against Educational Credit Management Corp. (ECMC), seeking a discharge of her $112,000 student loan.
Elizabeth’s attorney knew that she would only succeed if she demonstrated that payment would impose an “undue hardship,” as defined by the three-pronged Brunner test. Her attorney argued that Elizabeth met all three prongs, and the judge agreed. Ultimately, the judge determined that:
- Elizabeth could not support herself and her children with a “minimal standard of living” if forced to repay the $112,000 loan.
- “Circumstances,” including the ages of Elizabeth’s two dependent sons and the extensive history of salary increases for public school teachers over time in Elizabeth’s state, established that her financial situation was “likely to persist.”
- Elizabeth had made a “good faith effort” to repay her loan; she had paid off more than $9,000 of her loan and applied for the loan forgiveness programs for which she expected to qualify.
Based on these arguments, the bankruptcy judge determined that Elizabeth demonstrated “undue hardship.” Elizabeth got a full discharge of her $112,000 student loan.
At Lexria, our mission is to make financial justice accessible. We’re starting with student loan discharge for people who have filed or are considering filing bankruptcy — people like Elizabeth.
* Name has been changed to protect privacy.