How A New York Bankruptcy Judge’s Ruling Could Help People With Student Loan Debt

The fact that more than 45 million people in the United States are struggling with student loan debt is no surprise to anyone. One of the hottest topics of conversation in political debates is student loan forgiveness and how to ease the burden that a majority of young adults are coping with. Up until recently, the only relief available came from alternative repayment plans and loan forgiveness options with difficult application processes and qualifications that were challenging to meet.

In January, however, the tide turned when a New York City attorney with more than $200k in student loans was able to get his debt dismissed in bankruptcy court. His win sparked the interest of young professionals across the country who have been desperate for any kind of relief from unmanageable monthly payments.

Student Loan Borrowers Owe More Than They Make

In 1993, Kevin Rosenburg did what many young people do — he took out student loans to finance his college education. After earning his undergraduate degree and serving for a few years in the military, he took out loans again to pay for law school. Upon graduation, he had accumulated $116,000 in debt that quickly capitalized to more than $200,000. The payments on this sum left Rosenburg nearly $1,500 in the hole every month, unable to make any financial headway in life.

Can Student Loans be Dismissed in Bankruptcy?

When Rosenburg filed for bankruptcy, he claimed that he was making too little and owed too much. According to the bankruptcy judge handling his case, his situation met the requirements of the “Brunner Test,” which allowed him to dismiss his balance in bankruptcy. The Brunner Test is a set of three criteria that a person must meet to dismiss their student loans in bankruptcy. The criteria include:

  • The person is unable to maintain a minimal standard of living due to their student loan payments
  • The person’s circumstances will stay that way for the majority of the life of the loan
  • The person made a good faith effort to make their student loan payments

Although not all courts agree on the criteria of the Brunner Test, there is some hope for student loan borrowers that the ability to dismiss student loans is becoming a possibility.

What to Do if Your Debt is Too Much to Bear

If you’re struggling with student loan debt, waiting for a court to dismiss it via bankruptcy might not be a viable option. In any situation, a qualified and experienced student debt settlement attorney can provide you with legal counsel regarding your options. Debt settlement attorneys are skilled at negotiation and work so you can walk away free from your debt with a promising future. When debt settlement is not an option, an attorney can also assist you with loan consolidation or alternative repayment qualifications.

Knowledgeable Debt Settlement Attorneys Near You

Debt settlement is one of the smartest choices you can make for your future if you’re drowning in student loan debt. Don’t wait another day before reviewing your options for a financially debt-free future. At McCarthy Law PLC, our experienced attorneys will find a solution to relieve your burden.

At our office, we offer free consultations, so there’s no risk involved in learning your options for resolving private student loan debt. To schedule a free consultation, call our office at 855-976-5777, or complete our contact form.

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Michael Adams

Michael Adams

Michael Adams focuses his practice in debt litigation and consumer protection. Michael regularly assist clients through the debt settlement process as well as ensuring their rights as consumers are protected. Michael is an Arizona native who received his undergraduate degree from the University of Arizona and his law degree from Arizona Summit Law School where he excelled academically.