A federal appeals court has urged a bankruptcy judge to consider a settlement that would allow a Duxbury father to erase more than $246,000 in student loan debt.
Fourteen years ago, now 65-year-old Robert Murphy lost his $165,000-per-year job as president of a manufacturing company and since then has been unable to find new employment. Without income, the student loan debt he amassed to send his three children to college continued to grow with little hope of paying it back. In fact, Murphy determined that even if he were to find another job at his age making $50,000, he would have to work until the age of 77 to pay off the debt, which by then would have doubled to more than $500,000. Murphy filed for bankruptcy in 2012 and is currently facing foreclosure on his home of 30 years.
The Educational Credit Management Corp., the company who assumed Murphy’s student loans after he filed for bankruptcy, tried for four years to have the debt discharged, but the bankruptcy court found that Murphy failed to prove “undue hardship.” Now, the US First Court of Appeals has urged both parties to try to settle because they have found that repayment would indeed not be feasible in Murphy’s case. The proposed settlement has been sent to the bankruptcy court, which a judge can either approve or deny. If the settlement is denied, however, the case will be taken back to the appeals court.
Murphy’s case is one of many that challenge how much hardship a person needs to prove before they can be eligible for a discharge of federal student loan debt. Courts currently use their discretion to determine when financial hardship becomes “undue,” with no set standard for approving or denying a discharge for borrowers.
This settlement will ultimately preempt a decision that could establish a precedent for cases like this in the future. To read more about this story, please visit The Boston Globe online.
Call Us Today for Smart Debt Solutions
Americans currently hold more than $1.2 trillion in student loan debt, with approximately 17 percent of all borrowers severely delinquent on their accounts. If you are struggling with student loan debt and are looking for a solution, contact Atlas Consumer Law to speak with a Chicago debt relief attorney. We would be happy to discuss your options with you during a consultation. Call our office at your earliest convenience at (312) 313-1613.