A recent ruling by the US Court of Appeals in Colorado held that a couple’s private student loan debt can be discharged through bankruptcy.
The ruling significantly impacts the long-standing legal concept that such loans were non-dischargeable under the bankruptcy code.
In the 48-page opinion, the court states:
This case raises a question of first impression in this circuit: does an educational loan constitute ‘an obligation to repay funds received as an educational benefit…We conclude that it does not. Exercising jurisdiction under 28 U.S.C. § 158(d)(2)(A), we affirm the bankruptcy court’s interlocutory order denying Navient’s motion and remand the case for further proceedings.
According to one bankruptcy expert who spoke with yahoo.com (article here),
the ruling potentially converts a ton of student loan debt… if adopted nationally, tens of billions dollars, from presumptively non-dischargeable to automatically dischargeable.
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