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  • Matthew Hartley

The Latest Tenth Circuit Ruling Might Prompt the Reopening of Some Old Bankruptcy Cases

Over the years, many have come to believe that you can't get student loan debt reduced or discharged through bankruptcy. But this misconception has just been busted!

In late August, the U.S. Court of Appeals for the 10th Circuit affirmed that certain student loans not guaranteed by a governmental unit may be discharged in bankruptcy. The ruling applies only to private lenders' loans for certain non-accredited schools and loans exceeding the cost of attendance.

This might be bad news for the private lenders of non-qualified student loans, but for those facing bankruptcy with student loans that fit the criteria, this is a welcome move. Navient Solutions LLC, one of the largest private student loan lenders, sought a ruling to have its loans declared non-dischargeable, but the appellate court said certain private student loans can be discharged.

In turn, this ruling will force bankruptcy courts to look more closely at student loan debt, broadening options for struggling debtors, and prompting the reopening of some old bankruptcy cases.

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