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Massachusetts Personal Bankruptcy Student Loans Case

Massachusetts personal bankruptcy cases regarding student loans are guided by the strict law that says that there must be “undue hardship.” In a case decided recently, the debtor claimed that her financial condition, which included homelessness and a minimum wage job, qualified her as having an undue hardship. Undue hardship, if found by the Court, will qualify a debtor for a discharge in student loans in a Massachusetts personal bankruptcy. Unfortunately, the case gives us no new guidance; both parties filed motions for summary judgment.

The debtor lost her motion because of a technicality – failing to file an affidavit in a timely fashion, and the creditor, Educational Credit Management Corporation, lost its motion because it relied on the availability of the Income Based Repayment plan, which cannot be the only factor in consideration.
Our recent article about discharging student loans in bankruptcy talked about the burden of undue hardship. More importantly, it gave an outline of how to approach loans that were difficult to pay. There are ways to address them. One way not mentioned in our prior blog was the Educational Credit Management Corporation, which provides assistance in repayment.