- February 7, 2017
- Thomas Adam
- Student Loans
Discharge Student Loans
As many have now heard, ITT Technical Institute (“ITT Tech”) has shut down its operations.The chain of schools was a ubiquitous example of for-profit post-secondary education and, at the time of its shutdown, maintained 136 campuses and boasted an enrollment of over 40,000 students. ITT
Tech is just one of a number of private institutions and chains, including Corinthian Colleges, Inc, that have closed their doors in the past few years leaving students wondering what impact the closures have on their loans. Many believe that it is impossible to discharge student loans in bankruptcy. The truth is that, while it can be difficult, it is not impossible.
Option 1 to Discharge Student Loans
First, federal student loan debt is dischargeable in bankruptcy if the debtor is able to demonstrate that payment of the debt would impose an “undue hardship” on the debtor and his or her dependents. What constitute “undue hardship” is a question left for the courts. The most common test is whether: (1) the debtor cannot maintain a minimal standard of living if he were forced to repay the loans; (2) it appears likely that this will be the case over a significant portion of the lifetime of the debt; and (3) the debtor has made a good faith effort to repay the loans. If a debtor is able to demonstrate these factors, it is possible to have the debt discharged in bankruptcy. Given the inherent lack of clarity in what constitutes “undue hardship” it is important to retain an experienced Jacksonville bankruptcy law firm to handle your case.
Option 2 to Discharge Student Loans
There is a second option to discharge student loans may be of particular relevance for those victimized by the closing of ITT Tech or a similar for-profit institution. Essentially, student loan debt may be discharged, in bankruptcy or otherwise, if the debtor is able to demonstrate that the educational institution fraudulently misrepresented their services to the debtor. In the case of ITT Tech, some have complained that recruiters for the school boasted that positions paying six figures were typical for their graduates and that their job placement numbers approached 100%. If former students of ITT Tech or other for-profit institutions could demonstrate such misrepresentations that induced their enrollment, and ultimately led them to incur large amounts of debt, it is possible that they would be able to have their indebtedness discharged on this basis.
If you, or someone you know, are a former student of ITT Tech or a similar for-profit institution and have been saddled with debt that is preventing you from reaching your life goals and aspirations, contact the Adam Law Group to set up a consultation. Our bankruptcy lawyers in Jacksonville, FL may be able help discharge student loans from ITT Tech.