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There are many sad stories of people going into significant debt to finance their education. Then, they graduate and cannot find a job or get laid off. This spells potential doom if the amount of debt is too high and they cannot recover their earning power promptly.

I have many clients with significant student loan debt and it would be nice if it were easy to discharge that debt in bankruptcy along with their other unsecured debts. Unfortunately, it is not. Any attempt at discharging student loans in bankruptcy is a difficult and uphill struggle to say the least. There are numerous potential pitfalls, including the possibility that you may end up with a sufficiently larger tab then when you started.

An interesting case having to do with student loans occurred in Wisconsin recently, in In re Dustin John Busson-Sokolik, the debtor tried to discharge a student loan debt of $3,000 that he owed to the Milwaukee School of Engineering directly. The Bankruptcy court ruled against the debtor and found that the debtor owed $16,248.78 to the school, an amount that included costs and attorney fees. In the ruling, the court found that the actual use of the money that was lent to the student is not relevant, the important aspect is that the purpose of the loan was for education.

This is where the debtor and the debtor’s attorney should have chosen to cut their losses and just live with the bankruptcy court’s decision. Instead, they appealed the bankruptcy court’s decision to the district court, the district court ruled that the appeal was frivolous and not only affirmed the bankruptcy court’s ruling but extended it to $80,269 and made the debtor’s attorney jointly and severally liable for $61,249.50 of it!

The Seventh Circuit Court of Appeals later affirmed the ruling but reduced the total amount owed to $51,417.77, with the debtor’s attorney still jointly and severally liable for $30,971 of that amount.

Once again, the lesson to be learned is that sometimes it is better to cut your losses. Also, whenever you are trying to discharge a student loan debt, be very careful because you will face a potentially dangerous battle that could make your problems (and debts) worse. Make sure that you consult with a knowledgeable bankruptcy attorney who can advise you of the likelihood of success and whether it is a path you want to take.

If you live in the Phoenix, Arizona area and would like a consultation regarding your particular set of circumstances, give us a call at 866-703-3287 for a free consultation with an attorney at Wright Law Offices.

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  • Phoenix Office – New
    Wright Law Offices 
    2999 N. 44th St., Ste 600
    Phoenix AZ 85018 

    Telephone: 602-456-6085 / 866-703-3287
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What our clients are saying…

TOP Rated PHOENIX BANKRUPTCY ATTORNEY

Mr. Wright and his staff were amazing. They made a negative situation a lot better and turned it into a positive. Could really tell they care helping people and I will refer their Phoenix Bankruptcy Attorney firm to friends and family. Thanks again.

Tara
TOP Rated PHOENIX BANKRUPTCY ATTORNEY

I called around looking for the right bankruptcy lawyer and came across Benjamin Wright. He personally called me for the consultation seeing how I live in Kingman AZ. He was very helpful from the start and his staff was very friendly and explained any questions I had, sorry for all the questions. I would definitely recommend Wright law offices, and I do!! Thanks for everything, you made what seemed like a hard thing to do simple!! You guys rock!!!

Steffanie
TOP Rated PHOENIX BANKRUPTCY ATTORNEY

Great lawyer, he really helped my mother out of a jam. She was totally new to bankruptcy and he talked with us for about an hour and a half to make sure she wouldn’t be worried.

Damian
TOP Rated PHOENIX BANKRUPTCY ATTORNEY

Ben is a kind and down to earth attorney. He worked around my busy schedule as a single mom (school, full-time job, and daycare pick up and drop off times). He explained absolutely everything to me and was good about e-mailing. I am writing this review as a THANK YOU.

Shannon
TOP Rated PHOENIX BANKRUPTCY ATTORNEY

I had a very positive experience with Attorney Wright. He or his staff returned my e-mails and calls promptly (even after business hours occasionally). His fees were reasonable. He was patient with me when I showed up in court missing an important document. He is aggressive, but fair and nice.

Jenna