Opening the door to financial freedom from debt.
Lakewood, CA (PRWEB) June 30, 2012
California attorney Christine A. Wilton received a favorable ruling in Bankruptcy Court Tuesday June 26, 2012, discharging approximately $57,000 in student loan debt on behalf of her clients. At a time when student loan debt is a looming crisis, it's great to see attorneys succeeding on behalf of consumers.
Attorney Christine says that it's important to seek repayment options before coming into bankruptcy to discharge student loans. "Our case law requires the debtors to make a good faith effort to repay their debts by maximizing their income potential and minimizing their expenses first," she said. There are several student loan repayment options and knowing what is available is the first step toward kicking Sallie Mae to the curb.
Eliminating student loan debt in bankruptcy court is a very high burden for debtors to meet under the Brunner Test, which was adopted in the 9th Circuit under In re Pena, 155 F.3d 1108 (1998). The three-part test for a bankruptcy discharge of a student loan requires (1) that the debtor establish that they cannot maintain, based on current income and expenses, a 'minimal' standard of living; (2) the debtor must show that additional circumstances exist indicating this state of affairs is likely to persist for a significant portion of the repayment period; and (3) that the debtor has made a good faith effort to repay the loans. There have been subsequent cases after Pena that have narrowed the field and made it virtually impossible to discharge student loans in bankruptcy.
Her clients in this case, Schaffer v. ECMC (2:11-ap-01878-RN), were parents who took the student loans under a Parent's Plus loan program on behalf of their son and the lender never required their son to co-sign on the loans. When her husband fell ill in 2006 their household income dropped significantly. "I believe Judge Neiter made the right ruling in this case," said Attorney Wilton. "How can my clients be expected to repay their student loans when they can't even get current on their mortgage payments." They have truly done everything they could to reduce their expenses and without any college education themselves, their income potential has been reached. "It's truly rewarding to see such a great family free from oppressive debts."
Christine A. Wilton is a consumer bankruptcy attorney in private practice in Lakewood, California who litigates on behalf of her clients in bankruptcy court in the Central District.