Sam’s central question for Heather was “can student loans be wiped out in bankruptcy?” Heather’s answer is generally “no,” at least in the Western District of North Carolina. Sam agreed that this is also almost always the case where he practices law, in Omaha, Nebraska.
Heather commented that some areas of the country are handling this issue differently, and she is watching to see if changes are made.
Heather and Sam discussed that they do not often see student loans discharged in bankruptcy filings because of the difficulty of proving undue hardship in these cases and because of the expense of the related litigation.
Heather added that it’s important to know that unpaid tuition and fees are debts, not loans, and are typically dischargeable. Also, to be non-dischargeable, one of the elements is that the loan was incurred solely to pay “qualified higher education expenses” from an “eligible educational institution,” and loans to attend other institutions – such as certain trade schools – do not meet this element and thus may be dischargeable.
During the remainder of the interview, Sam and Heather discuss the intricacies of this topic based on their decades of experience.
To watch the interview, visit Sam Turco’s YouTube channel, here.
Heather was also recently interviewed by Super Lawyers on the same topic. Read the article here.