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  • Why student loan borrowers should pay attention to these two court cases

    MarketWatch - 10/25/2015

    In just one out of every 300 bankruptcy cases where the filer has student loan debt will the filer try to get it discharged, according to an estimate from Daniel Austin, a professor at Northeastern University’s school of law, who tracks these cases. That’s despite the fact that for bankruptcy filers with student loan debt, the loans accounted for 48% of their unsecured debt on average in 2013. And of those who actually try to get their loans discharged, about half are successful, Austin estimates.

    Borrowers shy away from trying to get their debt discharged both because of the perception that it’s impossible to do and because of the challenges involved, including filing a separate federal lawsuit within the bankruptcy case, Austin said.

    “The structural impediments are overwhelming,” he said. “I have seen cases where you look at the debtors’ numbers on paper, you can show with mathematical certainty that they will never be able to pay this, yet they don’t bring the cases.”

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