|By Ed Palattella, Erie Times-News, Pa.|
|McClatchy-Tribune Information Services|
Twenty-one years later, the debt has doubled as Morgan has struggled to repay it.
The student loan debt burdens Morgan's finances the most.
She has taken a difficult and rare approach to try to erase it.
Morgan filed for Chapter 7 bankruptcy, and she wants a judge to discharge her student loan debt.
She will get little help from the law.
Morgan will have to show, among other things, that her poor financial condition is likely to persist for the rest of her life -- that, in the parlance of bankruptcy law, her situation has "a certainty of hopelessness."
"The standard is really high," said lawyer
Morgan and her lawyer are hoping her case is different, and that she is able to win a discharge by proving repayment of her student loan debt would impose an "undue hardship" -- the sole exception the Bankruptcy Code allows for a discharge of student loan debt to occur.
"We will see what happens," said her lawyer,
Flood of debt
Morgan's request for relief in
In January, U.S. Rep.
Outside of mortgages, student loan debt --
"Student loan debt is the only form of consumer debt that has grown since the peak of consumer debt in 2008," the New York Fed reported in
The bank and others have also pointed to a rise in student loan debt among older Americans, who, like the younger Morgan, have yet to pay off loans they got to attend college.
"The percentage of households headed by those aged 65 to 74 having student debt grew from about 1 percent in 2004 to about 4 percent in 2010," the
"While those 65 and older account for a small fraction of the total amount of outstanding federal student debt, the outstanding federal student debt for this age group grew from about
Meeting a test
Before the mid-1970s, student loans were dischargeable in bankruptcy cases like any other debt, such as an auto loan or credit card debt.
Under the test, "undue hardship" exists if:
- "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."
- "Additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the student loan repayment period."
- "The debtor has made good faith efforts to repay the loans."
Morgan in March filed for Chapter 7 bankruptcy, or liquidation. She listed assets of
Skiba, Morgan's lawyer, in July filed a separate lawsuit -- known as an adversary proceeding -- in Morgan's bankruptcy case. He asked U.S. Bankruptcy Judge
Skiba is arguing Morgan meets all the criteria of the Brunner test. In court records, he cited her income at
Morgan, Skiba wrote, is uninsured because she cannot afford health insurance, and she incurred
And Skiba wrote Morgan has been in repayment programs for her student loan, including an income-based program that has allowed her to forego payments on the loan until
The repayment program would require a monthly payment of about
Morgan, he wrote, "has tried unsuccessfully to obtain employment that would better correspond with her associate degree or that would better provide compensation. At age 52, the debtor has few prospects of bettering her financial situation."
Morgan, through Skiba, declined to be interviewed for this story.
Loans that 'linger'
ECMC wants Morgan's claim dismissed, according to a court filing docket Monday.
It is arguing Morgan's circumstances fail to meet the Brunner test, and that she has yet to exhaust remedies for repayment, such as enrolling in the William D. Ford Federal Direct Loan Program.
On its website, ECMC warns against the difficulties of a debtor meeting the Brunner test. "For many student loan borrowers," according to the website, "the legal hurdles are significant."
Skiba, Morgan's lawyer, does not discount the legal hurdles. But he also does not discount the difficulties that he said face people such as Morgan -- debtors in their 50s and 60s unable to pay off their student loans.
Unless those loans are discharged in bankruptcy, Skiba said, "they linger with them forever."
(c)2014 the Erie Times-News (Erie, Pa.)
Visit the Erie Times-News (Erie, Pa.) at www.GoErie.com
Distributed by MCT Information Services