Fern v. FedLoan Servicing

The Department challenges the bankruptcy court's determination that debtor's student loans are dischargeable based on undue hardship under 11 U.S.C. 523(a)(8). The bankruptcy appellate panel concluded that there is no error in the bankruptcy court's determination where the evidence supports the bankruptcy court's conclusion that debtor's income has been consistent and is unlikely to improve in the future; debtor's monthly expenses are reasonable, necessary, modest and commensurate with her income; and debtor's emotional burden related to the student loan obligations, the continued accrual of interest on the loans, the negative credit effect of the loans, and the potential tax obligation when the repayment plan expires were in error also weigh in favor of discharging the student loans for undue hardship. Accordingly, the panel affirmed the bankruptcy court's judgment. View "Fern v. FedLoan Servicing" on Justia Law