On Monday harry potter 7 Circuit Court of Appeals published its decision in a education loan case. ?The problem prior to the court was a boring procedural matter, so this particular case didn’t generate much attention. ?However, overview of the reality of the case shows some of the absurdity of coping with student loans within the courts.
The Plaintiffs, Frederick Greene and his wife, declared bankruptcy in 2005. ?Among the money they owe were a large volume of student loans. ?Although the Greenes were able to get all of their other debt discharged within the bankruptcy, the student loans were left in place. ?The Court would not discharge the student loan debt since the Department of Education had not yet attempted to collect the debt.
From a legal standpoint, the logic behind the Court’s inaction makes sense. ?The Courts are extremely busy and they’re careful not to litigate problems that only “might” happen. ?Basically, the situation needs to be ripe for judicial review.
The trouble with the Court’s 2005 inaction is that Mr. Greene and his wife were sticking with a ticking time bomb. ?The fuse was lit the moment those student loans were generated also it was only a matter of time before the debt collectors came calling…
In 2010 the Department of Education began collecting Mr. Greene’s wages. ?Using the issue now ready for review prior to the Court, Mr. Greene initiated proceedings to have the student loan debt discharged. ?The Department of Education filed a counterclaim demanding the debt be repaid.
Instead of getting his student loan debt discharged, Mr. Greene lost his case to the Department of Education. ?Not only was the debt not discharged, however the Department of Education received a purchase in the Court ordering Greene to repay the debt. ?Because Greene brought the 2nd lawsuit and lost, the Department of Education, now equipped with a Federal Court order, enhanced their ability to gather the debt.
What does this mean for borrowers?
For starters, it is important to note that the opinion is compiled by Judge Posner. ?He is highly regarded among legal scholars among the brightest legal minds, particularly when it pertains to matters of economics. ?His opinions and insights will probably carry more weight within the legal community when compared to other Court of Appeals decisions.
Many bankruptcy attorneys may look at the eventual outcome for Mr. Greene and advise future clients that in certain circumstances it might not be worth their time for you to pursue a relieve their student loan debt. ?They can explain the fact that this Plaintiff remained in a worse position together with his student education loans because he took his lender to court.
The decision doesn’t provide enough information to completely access the financial situation of Mr. Greene and the wife, only one fact sticks out. ?A legal court discovered that Mr. Greene should have all his debt discharged, except for his student loans. ?In?this case, like many others, student loan debt was treated differently than the rest of the types of debt. ?The Court found that Mr. Greene deserved a rest coming from all his other debt, yet ordered he pay back every penny on his student loans.
The main point here here is that the law currently makes discharging education loan debt in bankruptcy very difficult. ?The expertise of Mr. Greene and the wife over the past decade only serves to help prove this time.