Celebrating 10 years! 2007-2017

Judge rejects bankrupt woman's bid to cancel $333,423 student loan bill

https://www.wsj.com/articles/judge- rejects-bankrupt-womans-b karlmarx08/07/17
I looked at the legal opinion and it was eight pages long. caj11108/09/17
'till death do us part. isthisit08/07/17
https://www.orangepower.com/threads /judge-rejects-bankrupt-w flyer1408/07/17
2014 Jeep. Out of warranty. Not German. Easily repaired by sanka08/07/17
Yeah no kidding. I make way more than her and I drive a **it lawtard08/12/17
$525 a month to a sham charity. Newer vehicle. Not a test vohod08/07/17
Sometimes it feels like the fake news media is always lookin triplesix08/07/17
I was thinking the same. 3lol08/07/17
From a recent unpublished case from the 6th COA: "Because uknownvalue08/07/17
Yeah there's a circuit split on the issue of whether IBR par onehell08/07/17
It's hard to argue a $0 a month payment under IBR is unmanag thirdtierlaw08/07/17
Seems to be a disconnect in the salary reporting. Says she inho2solo08/07/17
BK looks at take home pay after non-voluntary deductions (ie vohod08/07/17
Health insurance isn't voluntary. flyer1408/08/17
It absolutely is. You can have insurance or pay a tax. I vohod08/08/17
But-but-but, Nancy TOLD us it is NOT A TAX. She promised! inho2solo08/08/17
Yep, you can definitely still decide to forego insurance. Th onehell08/08/17
Vohod, thanks for the explanation. inho2solo08/08/17
karlmarx (Aug 7, 2017 - 9:53 am)

https://www.wsj.com/articles/judge-rejects-bankrupt-womans-bid-to-cancel-333-423-student-loan-bill-1501882769

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caj111 (Aug 9, 2017 - 2:19 pm)

I looked at the legal opinion and it was eight pages long. Not terribly long for bankruptcy or the legal world in general but if I were the judge, here's what I would say:

"Take that $525 you give to charity each month and apply it to your student loans instead. Problem solved. For the next 25 years anyway."

$ 323,000 is a lot for sure, and it probably never will be paid off, but this woman has *some* discretionary income to service it. Give me a break. Zero sympathy here.

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isthisit (Aug 7, 2017 - 10:03 am)

'till death do us part.

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flyer14 (Aug 7, 2017 - 10:13 am)

https://www.orangepower.com/threads/judge-rejects-bankrupt-woman%E2%80%99s-bid-to-cancel-333-423-student-loan-bill.234931/

Full article, non paywall.

"...she makes $63,000 a year. The judge added that Ms. McDade’s ability to make car payments for a 2014 Jeep and donate $525 each month to charity “make it clear that [she] maintains at least a minimal standard of living.”

Throughout the dispute, Education Dept. lawyers argued that Ms. McDade’s financial troubles won’t persist because she is employed and that she could find another job if she lost her position as a business administrator. They also pointed out that she received a salary increase during bankruptcy that bumped her monthly income to nearly $4,000 from roughly $2,900."

***

I have no sympathy... that 2014 Jeep books at more than all of my cars combined, and I can't afford to donate $525 a month to any charity regardless of its nature.

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sanka (Aug 7, 2017 - 10:48 am)

2014 Jeep. Out of warranty. Not German. Easily repaired by an off-the-books grease monkey. Obviously but one level above welfare recipient class.

$525 to charity. Is it a pay-to-play scheme to get appointed to a paid directorship position on the charity's board of officers?

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lawtard (Aug 12, 2017 - 5:15 pm)

Yeah no kidding. I make way more than her and I drive a **itty 2008 Mazda 6.

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vohod (Aug 7, 2017 - 10:55 am)

$525 a month to a sham charity. Newer vehicle.

Not a test case to have ever placed any hope on. Brunner is a smell test.

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triplesix (Aug 7, 2017 - 11:00 am)

Sometimes it feels like the fake news media is always looking to find the most unsympathetic student debtors just to stick to the wage slaves.

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3lol (Aug 7, 2017 - 4:14 pm)

I was thinking the same.

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uknownvalue (Aug 7, 2017 - 11:36 am)

From a recent unpublished case from the 6th COA:

"Because [Debtor] has failed to make voluntary payments on her student loans AND has failed to participate in an income contingent repayment program, the bankruptcy court did not err in determining that [Debtor] has not made a good faith effort to repay her student loans."

Since all federal loans are eligible for various payment plans, it looks like student debt will only be dischargeable if it is a private loan.

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onehell (Aug 7, 2017 - 4:35 pm)

Yeah there's a circuit split on the issue of whether IBR participation is a required component of good faith effort. Some people in other circuits have argued that it isn't, based largely on the tax bomb issue.

Regardless though, the article says a lot of this debt is for her kids, which probably means parent PLUS loans. There are no income-contingent plans for parent loans.

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thirdtierlaw (Aug 7, 2017 - 4:48 pm)

It's hard to argue a $0 a month payment under IBR is unmanageable. It is supposed to take the sting out of the nondischarge policy

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inho2solo (Aug 7, 2017 - 3:53 pm)

Seems to be a disconnect in the salary reporting. Says she makes $63K a year but then later says she just got a raise "to almost $4000 a month", which puts her south of $48K. Unless on the second hand they're reporting take-home pay?

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vohod (Aug 7, 2017 - 11:08 pm)

BK looks at take home pay after non-voluntary deductions (ie, taxes and withholdings but not 401k or health insurance)

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flyer14 (Aug 8, 2017 - 8:06 am)

Health insurance isn't voluntary.

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vohod (Aug 8, 2017 - 10:40 am)

It absolutely is. You can have insurance or pay a tax.

I collect judgements 11~13 hrs a day. Trust me on this one.

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inho2solo (Aug 8, 2017 - 11:22 am)

But-but-but, Nancy TOLD us it is NOT A TAX.

She promised!

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onehell (Aug 8, 2017 - 4:45 pm)

Yep, you can definitely still decide to forego insurance. The tax is less than the premiums would be, and the individual mandate has more holes in it than Swiss cheese. Even in the unlikely event that you don't fall into an exception, you don't even have to pay the tax unless you're otherwise owed a refund!

https://www.healthinsurance.org/faqs/ive-heard-that-the-government-wont-really-be-able-to-enforce-the-penalty-for-not-having-health-insurance-is-this-true/

Ironically, if you got too much obamacare subsidy because your income turned out higher than expected, repayment of the subsidy can (AFAIK) be pursued like an ordinary tax, unlike the shared responsibility penalty.

So, comply with O-care and pay insurance premiums, PLUS repay whatever subsidy you got if you turn out to make more than you expected to make. OR pay a tax penalty that you only have to repay IF you would otherwise get a refund.

So yeah, you absolutely can still decide to fly without insurance and for several reasons, that decision can still make financial sense. And in BK, I can definitely see the argument that it remains an optional expense. And its optional nature was key to its constitutionality, as SCOTUS has already ruled. It's no different than paying a tax penalty on an early 401k withdrawal: We tax behavior we want to discourage but cannot outright prohibit.

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inho2solo (Aug 8, 2017 - 10:33 am)

Vohod, thanks for the explanation.

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