It’s not impossible to get student debt reduced or eliminated in bankruptcy , but it can be an ordeal. A decision by the Ninth U.S. Circuit Court of Appeals in San Francisco last week shows what it takes.
The case involved Michael Hedlund of Klamath Falls, Ore., who graduated from Willamette Law School in 1997 with more than $100,000 in student debt. That amount is now average for law-school graduates.
After failing the bar exam twice and missing it a third time when he locked his keys in the car, Hedlund was unable to work as an attorney and took a job as a juvenile counselor making about $40,000 a year. Unable to repay the debt, he filed for bankruptcy in 2003.
After 10 years and two trips through Bankruptcy Court and the appeals process, the Ninth Circuitruled in the borrower’s favor last week, discharging all but $32,000 of the $85,000-plus he owed one student-loan creditor. Hedlund settled with a second creditor out of court by agreeing to pay $50 a month on almost $18,000 in debt. Lawyers with Morrison Foerster in San Francisco represented him in the Ninth Circuit pro bono.
To read more about the case, see my column in Sunday’s paper here. For full access, follow me on Twitter @kathpender.
| May 28 at 2:23 pm
