BANKRUPTCY LAW (Student Loans): A former medical student was entitled to $440,000 in debt relief, because he was able to meet the following standards pursuant to Brunner v. New York State Higher Educ. Services Corp., 831 F.2d 395, 396 (2nd Cir. 1987).
“Under [11 U.S.C.] § 523(a)(8), [debtor]’s student loans may be discharged in full, in part, or not at all, based upon the extent to which the court finds the repayment of these loans would constitute an undue hardship. Craig, 579 F.3d at 1045-46. Both [debtor] and the [Department of Education] concede the court has authority to enter a partial discharge pursuant to its equitable authority under § 105(a). Saxman v. Educ. Credit Mgmt. BJR Corp. (In re Saxman), 325 F.3d 1168, 1174 (9th Cir. 2003) (holding that a debtor is entitled to a discharge of that portion of the student loan that meets the requirements of § 523(a)(8)); Educ. Credit. Mgmt. Corp. v. Jorgensen (In re Jorgensen), 479 B.R. 79, 86 (B.A.P. 9th Cir. 2012) (applying each element of the Brunner test to the partial discharge analysis).The Ninth Circuit in United Student Aid Funds v. Pena (In re Pena), 155 F.3d 1108, 1112 (9th Cir. 1998), adopted the three part test (“Brunner test”) for determining undue hardship articulated in Brunner v. New York State Higher Educ. Services Corp., 831 F.2d 395, 396 (2nd Cir. 1987):
(i) the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for himself and his dependents if forced to repay the loans;
(ii) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and
(iii) the debtor has made good faith efforts to repay the loans.”
> The debtor’s dire circumstances met this test.
> See the Court’s decision in In re Koeut, 622 B.R. 72 (2020)
BANKRUPTCY LAW (Automatic Stay): In en banc opinion, 9th Circuit holds that debtor can recover all fees spent in resisting creditor who violates automatic stay in seeking to collect debt (America’s Servicing Co. v. Schwartz-Tallard, originally issued 4/16/2014, San Francisco, modified Autumn 2015) BANKRUPTCY LAW (Automatic Stay): In these times, creditors should be generous in allowing borrowers to repay balances. If debtor files for bankruptcy, insisting on collection may be costly.When the debtor files for bankruptcy, 11 USC Sec. 362(a) prohibits further attempts to collect the debt, except in certain specifically defined circumstances. A creditor who does not respect the automatic stay risks liability.The text of 11 USC Sec. 362(a), states, in pertinent part, the following:“(a) Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title, or an application filed under section 5(a)(3) of the Securities Investor Protection Act of 1970, operates as a stay, applicable to all entities, of—(1)the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title;(2)the enforcement, against the debtor or against property of the estate, of a judgment obtained before the commencement of the case under this title;
(3)any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate;
(4)any act to create, perfect, or enforce any lien against property of the estate;
(5)any act to create, perfect, or enforce against property of the debtor any lien to the extent that such lien secures a claim that arose before the commencement of the case under this title;
(6)any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title;
(7)the setoff of any debt owing to the debtor that arose before the commencement of the case under this title against any claim against the debtor; and
(8)the commencement or continuation of a proceeding before the United States Tax Court concerning a tax liability of a debtor that is a corporation for a taxable period the bankruptcy court may determine or concerning the tax liability of a debtor who is an individual for a taxable period ending before the date of the order for relief under this title.”
For example, in an en banc opinion, the 9th Circuit held that debtor can recover all fees spent in resisting creditor who violates automatic stay in seeking to collect debt (America’s Servicing Co. v. Schwartz-Tallard, originally issued 4/16/2014, San Francisco, modified Autumn 2015). The court cited a previous opinion that stated: “The automatic stay is intended to give ‘the debtor a breathing spell from his creditors. It stops all collection efforts, all harassment, and all foreclosure actions.’ S.Rep. No. 989, 95th Cong., 2d Sess. 54, reprinted in 1978 U.S. Code Cong. Admin. News 5787, 5840.” In re Bloom, 875 F.2d 224, 226 (9th Cir.1989).
US Constitution Provides for bankruptcy in Article I. It is a serious law.
WARNING: This post does not constitute legal advice, nor does reading it create an attorney/client relationship.
US Code cited by Cornell University, Legal Information Institute
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