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Student Loan Debt Relief: How Much Hardship Does it Really Take?


The Department of Education has recently intervened in the case of a 65-year-old man named Robert Murphy, who has struggled for over three years in a legal battle to have his student loan debts discharged by bankruptcy. While student loans are typically not dischargeable barring the most extreme circumstances, Murphy’s case in particular, which is being held in a Boston federal court, may meet the government’s stringent criteria. Murphy’s case begs the question, how much does it take for a debtor’s circumstances to be considered dire? Exactly how do we define how desperate a person is before it is determined whether or not they can receive student loan debt forgiveness?

Murphy currently has nearly $250,000 in student loan debt that he accrued to send his three children to college. After losing his job at a manufacturing company in 2002, he has not been successful at finding new employment and was forced to file for bankruptcy. He is now asking for relief of these debts due to a total incapacity to repay them in the future, due to forces that are outside of his control.

Murphy determined that even if he were able to find another job at his age, paying the debt would be an unreasonable hardship. If he were to find a job making $50,000 per year, he would have to work until he was 77 years old to pay off the debt, which by that time would have swelled to approximately $500,000.

Should Murphy prevail in court, this could loosen the standard that is used to determine how desperate a person needs to be in order to qualify for debt forgiveness. Debtors must show a “certainty of hopelessness” so great that they would not be able to maintain even the most minimal standard of living if they had to continue paying their debt. The financial lives of borrowers seeking relief are minutely scrutinized to “protect the solvency of the student loan program.”

Currently, federal judges are urged by the government not to yield any ground to debtors who claim financial hardship. According the government, doing so would undermine the stability of the student loan system, the result of which would make bankruptcy an easy and convenient way to get rid of debt.

If you are struggling with student loan debt, the government is your worst enemy. Do not worry, there is hope for your situation! A Chicago bankruptcy attorney at Atlas Consumer Law can help you identify your options and choose a course of action that is best suited to your individual needs. Learn more by getting in touch with a Chicago bankruptcy attorney at our firm – call (312) 313-1613 today to schedule your consultation.