The bad economy, combined with the rising cost of higher education, has left millions Americans with student loans they cannot afford to pay back. Usually, the solution to unmanageable debt is to discharge the obligations in bankruptcy. However, it is much harder to discharge student loans than other types of debt like credit cards, medical bills or mortgages.
Most student loan discharges are granted because of “undue hardship.” This standard can be very hard to prove. Essentially, the filer must show that he or she is incapable of earning enough income to pay back the debt.
Recently, a bankruptcy court in Maryland discharged more than $300,000 in student loan debt after a filer claimed that her Asperger’s syndrome prevented her from being able to hold down employment.
The woman attended the University of Baltimore School of Law in the early 1990s, but never graduated. She subsequently received a master’s degree from another institution and a PhD from an unaccredited online school.
Despite obtaining these degrees, she said her disability made it very difficult to find suitable employment. The woman has a severe case of Asperger’s syndrome, an autism-spectrum condition that makes it difficult to function in social settings.
The judge’s decision was likely swayed by the “odd” behavior that the woman exhibited during her bankruptcy hearing. In issuing the decision, the judge noted that “to expect [the filer] to ever break the grip of Autism and meaningfully channel her energies toward tasks that are not in some way either dictated, or circumscribed, by the demands of her disorder would be to dream the impossible dream.”
Student loan discharges are rare, but they do happen. If you have a medical condition that prevents you from working, you may be eligible to have your student loans discharged in bankruptcy.
Source: Total Bankruptcy, “Bankruptcy Judge Lets Woman With Asperger’s Discharge Student Loans,” John Clark, May 29, 2012.
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