Case Chronicles: Jacob the Single Father and Sales Professional
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.
Jacob eliminated over $60,000 dollars of student loan debt in bankruptcy. This is his story.
Jacob is a single father from New York City in his mid-thirties. He immigrated to the United States as a child and was the first man in his family to attend college. He has earned multiple degrees, including a masters degree, all while working a full-time job. Shortly after graduating, Jacob became a father. Unfortunately, this joyous time was accompanied by a medical crisis. His son was born three months prematurely and had significant physical and developmental deficits. Despite having a full-time job, Jacob couldn’t afford his child’s medical bills and his own student loans. So he did what any parent would do and put his son first.
Jacob continued to pay for his child’s medical costs, as well as a monthly child support payment of nearly $1,000 to his child’s mother. Unable to keep up with his student loan payments, Jacob fell further and further behind.
In an effort to manage his debt, Jacob consolidated his student loans through the U.S. Department of Education in 2013. But this option failed to help Jacob. By December 2019, his loan had ballooned to a balance of $96,500, and he was making significant sacrifices to try to meet the monthly obligations.
At his breaking point, Jacob filed for Chapter 7 bankruptcy and sought to discharge his student loan debt. Because student loans are not dischargeable unless repaying the debt would impose an undue hardship on the debtor or his dependents, Jacob’s attorney set out to prove Jacob met the three-pronged Brunner test.
Fortunately, Jacob’s attorney’s arguments worked; the bankruptcy judge determined that Jacob met all three prongs of the Brunner test:
- Based on his current income and expenses, he could not make his current loan payments and uphold a “minimal standard of living.”
- Jacob’s financial commitments to his son with special needs and the low likelihood he would receive material pay increases in the future suggested his financial difficulties were “likely to persist.”
- Jacob’s pre-bankruptcy efforts to avoid defaulting on his student loans allowed him to meet the “good faith” requirement.
The judge determined that Jacob could afford a more modest monthly payment and ordered a partial discharge of his student loan. Specifically, the judge eliminated over $60,000, reducing Jacob’s student loan debt from $96,500 to $35,600. This reduction slashed Jacob’s monthly payments to $250, an amount that he could comfortably afford.
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