U.S. Supreme Court Denies Appeal in Student Loan Bankruptcy Case

On Monday, the U.S. Supreme Court declined to hear a case on whether people declaring bankruptcy should have an easier time erasing student loan debt in the process, The Wall Street Journal reported.

The court, in a brief written order, said it would not consider an appeal by an unemployed Wisconsin man who owes more than $260,000 in student loan debt from business and law school. The man filed for chapter 7 in 2012, a form of bankruptcy that liquidates an individual's assets, and sought to have his student loan debts discharged, but courts declined to do so.

A decades-old law prohibits Americans with taxpayer-backed student loans from canceling that debt in bankruptcy unless they can prove they face an "undue hardship," a vague phrase that has led to uneven interpretations in the courts. A 2005 law extended the prohibition to non-federal student loans. Consumer advocates say the three-part test most bankruptcy judges use to determine hardship is too strict, leading the vast majority of borrowers to be denied relief of their student loans.

 

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The Wall Street Journal

http://www.wsj.com/articles/supreme-court-denies-appeal-on-student-loan-erasure-1452527286