A Modest Proposal for Student Loan Treatment in Chapter 13

By Professor Michaela White

In any chapter of the Bankruptcy Code, student loans are nondischargeable unless the debtor can show that repayment results in “undue hardship.” But the outcome of a Chapter 13 appears to be worse for the stressed borrower. In Chapter 13 cases a greater economic hardship results than if the student loan borrowers had sought and obtained a Chapter 7 discharge. Why are we penalizing debtors who try to repay nondischargeable student loans in a Chapter 13? Doesn’t this frustrate the goal of the 1978 Code (a fresh start for the “honest but unfortunate debtor”) and . . .

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