May 8, 2017
“Thus, even if the court concludes that a debtor has acted recklessly or foolishly in accumulating student debt, that does not play into an analysis under the second prong.”
In an important decision last week, the 11th Circuit Court vacated and remanded Alabama District Court Judge W. Keith Watkins’ judgment concerning a single mother’s $112,000.00, $915/month student loan debt.
Through her individual bankruptcy proceedings, the debtor’s student loan debt was considered discharged under Section 523(a)(8) of the Bankruptcy Code. This section of the code is referred to as “undue hardship,” it reads:
“(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt— ….(8) unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor’s dependents.”
This means, it was the opinion of the bankruptcy court that the continued, required payment of $915/month for 15 years was sure to impose an “undue hardship” on the debtor and her family. On appeal, district court Judge Watkins reversed this decision, once again binding the debtor to the full student loan debt amount.