New York Bankruptcy Judge Discharges “Bar-Study” Loan in Law Grad’s Bankruptcy

discharging-student-loans-in-bankruptcy

In general, student loans are not dischargeable in Bankruptcy – no matter the Chapter (7, 11, or 13).  However, in small test cases across the country, Bankruptcy Judges are providing small victories to Debtors with student loan debt along the way.

Under the “undue hardship” test that currently exists, unless you are incapable of obtaining any employment or are a quadriplegic and disabled to the point you can never work again, your student loans are exempt from a bankruptcy discharge, and will survive the bankruptcy case.  However,  Bankruptcy Judge Carla Craig of Eastern New York (Brooklyn) discharged a $15,000 Citibank “Bar-Study Loan.”  A Bar Study Loan is a living expense loan that law school graduates borrow to help them pay everyday living expenses and courses to study for the bar (not law school courses, but private bar prep for the bar exam).

In the grand scheme, most lawyers graduate law school with over $100,000+ in student loans.  So this loan of $15,000 may not be a huge portion of the debtor’s overall debt, but every little bit helps.  For quotes from Judge Craig’s decision, see Abovethelaw: Broke Law Grad Gets Bar-Study Loan Discharged in Bankruptcy

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