Student Loan Borrower Gets $178,000 Of Student Loan Cancellation Against Navient

Termination of the student loan

getty

This student loan borrower received a student loan cancellation of $ 178,000 against Navient.

Here’s what you need to know – and what it means for your student loans.

Student Loans

A 68-year-old student loan borrower waived $ 178,000 in student loans in Maryland US bankruptcy court. Terry Randall owed more than $ 500,000 in student loans, including $ 190,000 to Navient, one of the largest student loan providers in the country. Despite having multiple degrees, Randall has worked in a job that pays $ 13 an hour for the past several years. According to Randall, after paying her living expenses and even working overtime, she doesn’t have enough money to pay for student loans. Navient, the defendant, disagrees, saying Randall is able to work and repay at least part of her student loans. Randall argued in court that paying student loans presented undue financial hardship. Randall, a debtor of Chpater 7, filed an adversarial (a lawsuit in bankruptcy court) to settle her student loan under Section 523 (a) (8) of the US Bankruptcy Act. The court ruled in Randall’s favor. Why?

Termination of the student loan possible in court

There is a common assumption that student loans cannot be processed in bankruptcy. US bankruptcy law treats student loans differently from other consumer debts such as credit cards or mortgages. However, it is possible for a student loan borrower to overcome this guess. If a court is considering the option of paying off student loans, the court must consider all of the evidence presented. For example, it is not enough simply to say that you cannot pay your student loans. In this case, the U.S. bankruptcy court applied a legal standard known as the Brunner Test, which is the legal test in all of the District Courts except the 8th District and 1st District. Therefore, most student loan borrowers who apply for student loan termination in bankruptcy must pass the Brunner test. The court found that Randall passed all three points of the Brunner test:

1. the student loan borrower has extenuating circumstances that present a hardship;
2. these circumstances are likely to persist for the duration of the student loan; and
3. the borrower tried in good faith to repay the student loan.

The court found that it would be inappropriate to force Randall to work more than her current hours and overtime. Why? The court found that even with additional hours, Randall has no major assets, has tried diligently to work, and has no excessive expenses. Interestingly, the court did not grant Randall a full termination of the student loan. Rather, the court recognized that Randall could afford to repay at least part of her student loan – $ 12,000 – which means that the court granted a partial termination of the student loan.

Another win for student loan cancellation, but has the student loan cancellation burden gotten tougher?

This student loan cancellation gain comes at a critical time. Why? The U.S. Supreme Court recently declined to open a case related to student loan, bankruptcy, and student loan termination. As a result, a ruling in a U.S. District Appeals Court case may make it difficult for student loan borrowers to obtain bankruptcy cancellation of the student loan. In Tingling, the Second Circuit – the same dish that created the Brunner Standard – confirmed the adequacy of the Brunner test and a heavy burden on the repayment of student loans in bankruptcy. This has important legal implications as it signals to student loan borrowers that it is not easy to get termination of the student loan. This is potentially bad news for student loan borrowers who hoped the Second Circle could relax Brunner’s test application to allow more student loan borrowers to release their bankrupt student loans.

What that means for your student loan

Are your student loans canceled? Some student loan borrowers feel that the student loan cancellation has been canceled and all hopes have faded. Others say student loan cancellation is alive and well, especially since President Joe Biden has canceled $ 3 billion in student loans since taking office as president. The reality is that it is still possible to redeem student loans in bankruptcy. In addition to Randall, a Navy veteran was debited $ 220,000 from his student loan and a doctor was granted $ 430,000 to cancel the student loan. However, this is different from the student loan cancellation that most student loan borrowers seek: a comprehensive student loan cancellation. Senate Majority Leader Chuck Schumer (D-NY) renewed his call on Biden to cancel student loans of $ 50,000 this week. However, new research shows that widespread student loan cancellation could disproportionately benefit wealthier student borrowers. While there is no guarantee that there will be a full student loan cancellation, student loan borrowers will receive more than $ 90 billion in student loan if the student loan facilitation ends on September 30, 2021. While it is possible that Biden could extend this student loan relief beyond September 30 – and provide for another student loan cancellation of approximately $ 5 billion per month – Biden made no announcement.

When you have a student loan, make sure that you know all of your options to pay off student loans. Before filing for bankruptcy, you should first consider these popular options:

Student Loans: Read More

Biden has now canceled $ 3 billion in student loans

Are you eligible for a $ 500 million student loan cancellation?

5 ways Biden can change student loan forgiveness

Are you eligible for a $ 200,000 student loan cancellation?

source https://collegeeducationnewsllc.com/student-loan-borrower-gets-178000-of-student-loan-cancellation-against-navient/