Student Loans Discharged in Bankruptcy (Wolfson v. DeVos)

A Delaware resident managed to get their student loans discharged in bankruptcy, a rare occurrence. Let's see how they did and talk about the policies behind student loans and bankruptcy.

#StudentLoan #Bankruptcy #Discharge

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00:00 - Case Introduction
03:30 - The Brunner Test
06:17 - Case History
07:22 - The Court's Findings of Fact
15:55 - Bankruptcy Law
16:55 - Analysis: A Minimal Standard of Living
20:20 - Whether the Inability to Pay Will Persist
25:00 - Good-Faith Effort to Repay
30:21 - Conclusion
30:57 - Leonard Thoughts
34:49 - Biden's Dept of Ed Appeals
36:47 - The Appeal was Dropped
38:50 - More Leonard Thoughts
42:53 - Credits & Thanks

[GeFlixes]

Mr. Wolfson's life story is a clear counterpoint to the story of "poor people are poor because they don't try hard enough" - he's been struggling all his life to keep his feet under him despite being dealt a bad hand, and still society looks down on him. Someone who works two jobs despite having epilepsy is not someone who isn't trying hard enough.

[alphanaut]

I started a business as soon as I graduated from college. My student loan payments were due immediately, so I started putting them on credit cards. There were significant startup expenses for the business, which I acquired loans for. Every time I paid off a credit card, they would raise my limit, tempting me to put more and more on them- even going so far as to issue checks and encourage me to pay off my other loans with those checks and transfer the balance to the credit cards- for zero interest for the first year. I used those checks to pay off my $60, 000 in Student Loans, consolidating my personal and business debt. My business did very well- until some idiots flew a couple of planes into the World Trade Center towers. Then it tanked. I eventually had to file for bankruptcy on my debt, but it was all unsecured debt held by credit cards. That is my Student Loan repayment story. All discharged in bankruptcy.

[diestormlie]

An excellent articulation of Leonard's point about 'Poverty/Poor Taxes' is the "Boots Theory", as expounded upon by Sam Vines in one of Terry Pratchett's excellent novels.

[transcendtient]

If this isn't undue burden then nothing is. They don't care how bad your life is.

[ATMOSK]

Student loans can sometimes become a debt trap and in those situations where the borrower has no realistic hope of ever paying off the loan, it seems immoral to not allow discharge through bankruptcy.

[harvestforthemany]

They know student debt doesn’t make more income. They’re completely aware. They don’t care.

[eccod]

This story hits close to home for me. Men’s mental (and physical) health issues are often brushed aside, and cases like this show how the struggles manifest. Huge mic drop moment for this judge. Much respect. Also, I understand the concept of “if you borrow money, you should pay it back” in general, but why the hell is our government making a profit off of us in the form of interest?

[TheChibiGingi]

I've long since accepted that my ass will be in student loan debt until the day I die. If I had a time machine, I'd go back in time to bitchslap the idiot who thought 'hey, I already got one degree and managed to pay it off in a reasonable time, let me go back to college FOR A BACHELOR'S IN VISUAL ART', time paradoxes be damned. The whole system is a trap and I, one of many fools, fell for it. Glad to see Wolfson getting some kind of victory here, though.

[ckought]

When I graduated high school at 17 the mid-80's, I went to a technical college (DeVry) and had student loans through USA Loans. Because the college was in a different state than where I grew up, it required me to move to that location, find a place to live (they did not provide housing), have reliable transportation to get back and forth, and so on. The loan people at the school told me to take out the maximum loan amounts in order to partially cover the living costs, plus I had a part-time job at the school to help cover costs. Of course, looking back on it, it was a stupid decision to move to another state to go to college at 17, but try telling that to a 17-year-old brain getting a high-pressure sales pitch about how they're going to become a leader in their field and make massive amounts of money - but they have to act now! So, I was there for two years, squeaking by taking out maximum loans, living in an apartment where I was spending more money on roach spray than rent, the part-time school job had ended and I was looking for a part-time job that fit into my school schedule (I was carrying 18 hours, with classes spread out from early morning to night classes). After two years, I just couldn't do it any more. I was having to work a midnight shift as my part-time job, which made me exhausted all day, so my class work was falling behind, and I went from the Dean's List to C's and D's.

promises

[hhaavvvvii]

What you said at the end of having six months of student loan repayments between graduation from education and graduation into actually being able to practice law is a huge financial barrier that can and definitely is stopping poorer people from pursuing a legal degree and becoming lawyers.

[Salaundre]

This reminded me of my car being totaled. It was due to hail but it got me through the next 5 months. I literally had less than $1 before I got my first paycheck in almost a year. So I feel him.

[TheCommunistColin]

It's absolutely ridiculous that the standard is THIS HIGH to get debt waived. And he almost DIDN'T get it waived! What I'm getting from this is that if he was from a poorer background - his family not being able to help him with money each month to keep him afloat (not to suggest that he and his family are rich, as it sounds like they themselves are struggling hard) - then he would have lost, because he was apparently too poor to be bankrupt? Absolutely ridiculous. This is what people mean when they say the system is broken!

[SuperSmashDolls]

The Department of Education's argumentation is so bad I'm surprised they didn't argue, "Plaintiff could discharge their loans without making use of bankruptcy by committing suicide". I'm not exactly in favor of blanket student debt forgiveness (it would make income inequality slightly worse), but at the same time, there is no way in hell it makes any amount of sense for the Department of Education to prosecute such an obviously meritorious bankruptcy case here. Heads need to roll.

If I remember correctly, the whole idea behind making it harder to discharge student loans in bankruptcy, was to prevent a handful of really high-earning PhDs from declaring a sham bankruptcy to get out of paying the loan that they could pay off. That's why the courts have to determine if the burden is undue. However, the DoE has prosecutorial discretion here. Or if they don't, they should.

[PiscesintheRain]

I cannot at all understand having the stance of "I had to pay off my student loans, so it's unfair to forgive loans that are currently outstanding."
I got chicken pox as a kid, because there was no vaccine yet. It's not "unfair" that kids today don't have to go through that. I'm *glad* they have it better than I did. Same thing with student loans. We should be happy that things are better than they were.

[artimusgray]

"And I'm waiting for the time when, some day, our politicans find out that oppressive student loans don't help people" - They don't care. You're not rich.

[andybeans]

I work in HE and I'll happily state that instead of improving access and prospects for a greater number of students, Universities have conspired to beggar people from less affluent backgrounds, tricking them into paying for useless social science courses or other fields with no particular demand under the guise of it improving their life prospects. The point was to help a greater proportion of young people, not swindle the poorest out of what little they have.

[PureMagma]

Not allowing bankruptcy relief for student debt cuts against the foundation of "a fresh start" as originally set forth in Bankruptcy Law... The irony of a government that "operates" with untold Trillions of debt feeling that anything actually hinges on student debt repayment is laughable. It would be great if this becomes a precedent setting case!

[berthaduniverse]

LF, thanks for the channel, it's nice how much you help educate us on so many important topics. I've worked at both private and public colleges, and even served on one public college's budget committee (for over five years). From that, I learned a lot about the other side of the "costs of education" issue, things like payroll and facility maintenance are huge costs (payroll alone was between 85 and 90% of each quarters budget), that often were insurmountable within a quarter, and so required the college to raise a short-term bond to make its monthly payments (because the state is always slow to make its contribution to the district). That said, GM or Chrysler shouldn't get a pass on debt while regular people are not even allowed low interest and reasonable loan repayment options.

[kellychristus]

The government keeps coming after me even though I went to a predatory for profit school that shut down in the middle of being investigated by the Federal Senate.

Good job to this person!

[cropathfinder]

i can understand the job seeking issue due to epilepsy i suffer. I can't even use the unemployment office in my country cuz they try to force retraining into several jobs all of which are restricted due to my epilepsy. And not many employers wanna hire someone with epilepsy due to most of them not understanding what it is and i am obligated to mention it so i'm not held responsible if it affects my work. I can't get unemployment benefit cuz i'm not in the unemployment office and i haven't held a job for a full year. I haven't had a proper job in what almost 10 years at this point just some small gigs for change like this guy.