Sandra the Clinical Counselor Nearing Retirement

Published by Lexria Staff on 01/26/2021

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.

When Sandra* took out her first student loans in 1998 to finance her undergraduate studies, she knew that she wanted to become a clinical counselor. 

She graduated on time and started working diligently at community agencies, but she got paid very little and quickly fell behind on loan payments. Even after she negotiated a reduced payment schedule, she could not make regular payments; she defaulted on her loans. 

To make matters worse, her employer terminated her position due to cuts in public funding. Then, as she looked for a new job, a known hearing impairment started to significantly worsen. 

Having had no success with finding a job for which she was trained and qualified, and with her undergraduate loans already in default, Sandra enrolled in graduate school. She took on even more student debt to earn a masters degree in holistic counseling. 

Following her graduate studies, Sandra immediately secured employment in her field, working at a state-funded mental health organization… but was laid off when her new employer lost significant funding from the state. The organization tried to keep her employed by offering her an administrative role, but she was unable to serve in an administrative capacity answering phones because of her hearing impairment. 

Sandra joined an agency as a fee-for-service clinician in order to utilize her clinical expertise. Through the agency, Sandra’s compensation has never been enough to fund her minimalist lifestyle and still allow her to pay her monthly student loan payments. 

By the time she filed for Chapter 7 bankruptcy in 2016, Sandra was in her sixties and had $165,000 in unsecured debt, including $107,000 in public and private educational loans. 

Sandra’s attorney filed an adversary proceeding to discharge all $107,000 of student loan debt, arguing that repayment would cause undue hardship to Sandra under the Bronsdon “totality of the circumstances” test. (The Bronsdon test requires that a debtor’s past, present, and reasonably reliable future financial resources and other relevant circumstances unique to their case prevent them from paying the student loans while still maintaining a minimal standard of living.)

Looking at Sandra’s overall situation, the judge determined that she did meet the Bronsdon requirements because:

  • Sandra was actively making efforts to increase her income, but it still was not enough to fund her minimalist lifestyle; 
  • Sandra faced limitations on her earning potential that were outside of her control, like eliminated state funding and new regulations that impacted reimbursement from insurance companies and Medicare; and
  • Sandra’s hearing impairment limited her earning potential. 

With the help of her attorney and in the course of her student loan adversary proceeding, Sandra got full financial relief; 100% of her student loan debt was discharged. 

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 Sandra.

* Name has been changed to protect privacy.

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