NY Bankruptcy Judge's Ruling Discharges Lawyer's SL Debt

[karinothing]

www.nbcnewyork.com/news/local/lawyer-gets-ny-bankruptcy-judge-to-throw-out-his-221000-in-student-loans/2257792/

This could be pretty huge if other courts start to apply it. Also, as a side note, he has a smaller loan balance than I do lol sob.

[ESF]

The irony here now is that perhaps because of this victory, he will be able to retain a ton of clients to bring similar claims and make bank, LOL.

In all seriousness, though I am glad the judge pushed back on bad interpretations of the standard.

[wanderingback]

Wow!
I want to know more details. How much was his salary?
It is super depressing. My loans are at a little over $300,000, all federal and about 7% interest. Of course when paying them back COL isn’t taken in to account. I’m lucky that I have a partner that makes more than me, but it shouldn’t be that way. There are obviously plenty of doctors who are single and have over 300k in loans and live in HCOL while working in low paying specialties.

It’ll be interesting to see if this changes other bankruptcy cases.

[tiramisu]

Jan 10, 2020 13:17:53 GMT -5 wanderingback said:

Of course when paying them back COL isn’t taken in to account.

This is one of my biggest frustrations with student loan repayment options. Mine are significantly less than yours, but it's why I opted for a graduated repayment plan over 30 years instead of income-based, because I live in a VHCOL area. I'm also interested to see what this might do for future rulings.

[karinothing]

Jan 10, 2020 13:01:12 GMT -5 ESF said:

The irony here now is that perhaps because of this victory, he will be able to retain a ton of clients to bring similar claims and make bank, LOL.

In all seriousness, though I am glad the judge pushed back on bad interpretations of the standard.

Ha, he owns an adventure tour business, he doesn't practice law anymore.

[Jalapeñomel]

Jan 10, 2020 13:17:53 GMT -5 wanderingback said:

Wow!
I want to know more details. How much was his salary?
It is super depressing. My loans are at a little over $300,000, all federal and about 7% interest. Of course when paying them back COL isn’t taken in to account. I’m lucky that I have a partner that makes more than me, but it shouldn’t be that way. There are obviously plenty of doctors who are single and have over 300k in loans and live in HCOL while working in low paying specialties.

It’ll be interesting to see if this changes other bankruptcy cases.

This kills me. My mortgage is A TON, even if I make more than what I’d make in other areas.

[Susie]

Huh.  So did he ever have a job practicing law before the adventure tour company?  What happened with his legal career since 2004?  Did he leave the profession voluntarily?  

Borrowing $116k for undergrad + law school isn't unusual among lawyers (or other professions).  Both H and I (each) borrowed more than that to get through law school.  It isn't fun, but we're slowly paying it all back, a little more than halfway done now.  I wouldn't be able to leave the practice of law if I wanted to, because I can't earn as much doing anything else, and I still need to pay off these loans.  If I changed careers anyway (like plenty of people I know who are just DONE with law after a decade+), and made less as a result, would I still be making a "good faith effort" to repay with whatever I could afford on my new, lower income?

I have so many questions.

[wanderingback]

Jan 10, 2020 13:21:08 GMT -5 tiramisu said:

Jan 10, 2020 13:17:53 GMT -5 wanderingback said:

Of course when paying them back COL isn’t taken in to account.

This is one of my biggest frustrations with student loan repayment options. Mine are significantly less than yours, but it's why I opted for a graduated repayment plan over 30 years instead of income-based, because I live in a VHCOL area. I'm also interested to see what this might do for future rulings.

Yep, I live in vhcol as well.
And the irony for doctors is that our salaries are significantly lower in large, urban, expensive cities. I could make double (or more) if I moved to the middle of nowhere and could buy a house for $100,000.

Between an apartment and SL payment that’s $6,000 right there. I wonder if anything is ever going to change in regards to the cost of education.

[downtoearth]

Jan 10, 2020 14:27:04 GMT -5 wanderingback said:

Jan 10, 2020 13:21:08 GMT -5 tiramisu said:

This is one of my biggest frustrations with student loan repayment options. Mine are significantly less than yours, but it's why I opted for a graduated repayment plan over 30 years instead of income-based, because I live in a VHCOL area. I'm also interested to see what this might do for future rulings.

Yep, I live in vhcol as well.
And the irony for doctors is that our salaries are significantly lower in large, urban, expensive cities. I could make double (or more) if I moved to the middle of nowhere and could buy a house for $100,000.

Between an apartment and SL payment that’s $6,000 right there. I wonder if anything is ever going to change in regards to the cost of education.

I think this is a big issue if these programs keep relying on loans as the main way to help students. The cost of these professions is just going up and it will alienate students who don't have parent or spouse support that allows them to be at a certain level of support so then you are saturating these professions with upper middle class to upper class people and then you get less diversity and perspective from doctors and legal professionals, huh?

[downtoearth]

Jan 10, 2020 14:10:36 GMT -5 Susie said:

Huh.  So did he ever have a job practicing law before the adventure tour company?  What happened with his legal career since 2004?  Did he leave the profession voluntarily?  

Borrowing $116k for undergrad + law school isn't unusual among lawyers (or other professions).  Both H and I (each) borrowed more than that to get through law school.  It isn't fun, but we're slowly paying it all back, a little more than halfway done now.  I wouldn't be able to leave the practice of law if I wanted to, because I can't earn as much doing anything else, and I still need to pay off these loans.  If I changed careers anyway (like plenty of people I know who are just DONE with law after a decade+), and made less as a result, would I still be making a "good faith effort" to repay with whatever I could afford on my new, lower income?

I have so many questions.

Does it matter if he got a job as a lawyer? In your opinion, does it matter if you don't try to get a good paying job? What if they did work in a legal job, but for a state or non-profit that pays less. I think this case ended up won because there wasn't a way to pay it back on his income, no matter the career path. 

I feel like the judge was looking at it as debt, and wasn't judging how that person lived or their career based on that debt. I think I agree with the judge here - that the career path is irrelevant if you look at it as debt and not as that they didn't do enough to work in that career that resulted from the debt.  

[wanderingback]

Jan 10, 2020 14:33:25 GMT -5 downtoearth said:

Jan 10, 2020 14:27:04 GMT -5 wanderingback said:

Yep, I live in vhcol as well.
And the irony for doctors is that our salaries are significantly lower in large, urban, expensive cities. I could make double (or more) if I moved to the middle of nowhere and could buy a house for $100,000.

Between an apartment and SL payment that’s $6,000 right there. I wonder if anything is ever going to change in regards to the cost of education.

I think this is a big issue if these programs keep relying on loans as the main way to help students. The cost of these professions is just going up and it will alienate students who don't have parent or spouse support that allows them to be at a certain level of support so then you are saturating these professions with upper middle class to upper class people and then you get less diversity and perspective from doctors and legal professionals, huh?

Yep exactly. It’s rather disheartening. There are so many "hidden" costs of medicine outside of just tuition. Step and board exams cost over $1,000 and you have to take multiple of them. Applying for residency literally costs thousands of dollars then you have to pay for your own travel, flights, trains, rental cars, etc. You have to move for residency with typically no financial support except if you take out more loans. Then, you don’t get paid for another 4-6 weeks after you start residency and when you do get paid it’s like $3,000 a month, meantime your loans are still accruing so much interest and are just going up and up while you’re still in training for 3-10 more years after med school. Ugh. Clearly I needed to vent haha.

[tiramisu]

Jan 10, 2020 14:27:04 GMT -5 wanderingback said:

Jan 10, 2020 13:21:08 GMT -5 tiramisu said:

This is one of my biggest frustrations with student loan repayment options. Mine are significantly less than yours, but it's why I opted for a graduated repayment plan over 30 years instead of income-based, because I live in a VHCOL area. I'm also interested to see what this might do for future rulings.

Yep, I live in vhcol as well.
And the irony for doctors is that our salaries are significantly lower in large, urban, expensive cities. I could make double (or more) if I moved to the middle of nowhere and could buy a house for $100,000.

Between an apartment and SL payment that’s $6,000 right there. I wonder if anything is ever going to change in regards to the cost of education.

Between the cost of education and the inability for most people to work while in graduate school/law school/med school, I wonder as well. I have a Masters and work in nonprofit social services. I chose a grad program at a less-prestigious school, but it allowed me to work full time and only take out loans for school costs. I have friends who are $100,000+ in debt in a field where you're lucky to make $60,000 once you're licensed and just out of great school will probably be making under $40,000. It's ridiculous.

[MrsAxilla]

Jan 10, 2020 14:37:02 GMT -5 downtoearth said:

Jan 10, 2020 14:10:36 GMT -5 Susie said:

Huh.  So did he ever have a job practicing law before the adventure tour company?  What happened with his legal career since 2004?  Did he leave the profession voluntarily?  

Borrowing $116k for undergrad + law school isn't unusual among lawyers (or other professions).  Both H and I (each) borrowed more than that to get through law school.  It isn't fun, but we're slowly paying it all back, a little more than halfway done now.  I wouldn't be able to leave the practice of law if I wanted to, because I can't earn as much doing anything else, and I still need to pay off these loans.  If I changed careers anyway (like plenty of people I know who are just DONE with law after a decade+), and made less as a result, would I still be making a "good faith effort" to repay with whatever I could afford on my new, lower income?

I have so many questions.

Does it matter if he got a job as a lawyer? In your opinion, does it matter if you don't try to get a good paying job? What if they did work in a legal job, but for a state or non-profit that pays less. I think this case ended up won because there wasn't a way to pay it back on his income, no matter the career path. 

I feel like the judge was looking at it as debt, and wasn't judging how that person lived or their career based on that debt. I think I agree with the judge here - that the career path is irrelevant if you look at it as debt and not as that they didn't do enough to work in that career that resulted from the debt.  

What if he just CANNOT pass the bar? A friend from law school took it five times before he gave up and went to work in his dad’s insurance office. It’s not like he knew that when he took on the loans.

[StrawberryBlondie]

Jan 10, 2020 15:59:48 GMT -5 MrsAxilla said:

Jan 10, 2020 14:37:02 GMT -5 downtoearth said:

Does it matter if he got a job as a lawyer? In your opinion, does it matter if you don't try to get a good paying job? What if they did work in a legal job, but for a state or non-profit that pays less. I think this case ended up won because there wasn't a way to pay it back on his income, no matter the career path. 

I feel like the judge was looking at it as debt, and wasn't judging how that person lived or their career based on that debt. I think I agree with the judge here - that the career path is irrelevant if you look at it as debt and not as that they didn't do enough to work in that career that resulted from the debt.  

What if he just CANNOT pass the bar? A friend from law school took it five times before he gave up and went to work in his dad’s insurance office. It’s not like he knew that when he took on the loans.

Not to mention some states limit the number of times you can take it after failing.

[wanderingback]

Jan 10, 2020 16:24:32 GMT -5 StrawberryBlondie said:

Jan 10, 2020 15:59:48 GMT -5 MrsAxilla said:

What if he just CANNOT pass the bar? A friend from law school took it five times before he gave up and went to work in his dad’s insurance office. It’s not like he knew that when he took on the loans.

Not to mention some states limit the number of times you can take it after failing.

Yep, same in medicine. You'll have a very difficult time getting licensed in states if you've failed X number of times. 
I have a family friend who finished residency many years ago but was having such a hard time passing her board exams.
She had 1 final attempt for her state and finally passed. 

All sort of life events could happen in which you might longer want to or be able to make $500,000 a year.
Not that I ever wanted to be a ophthalmologist for example, but I certainly didn't have the research or step scores to become one. So I'm in one of the lower paying specialties by choice because that's what I love, but how was I supposed to know that when I started taking out loans?

[tiramisu]

Jan 10, 2020 20:10:50 GMT -5 wanderingback said:

Jan 10, 2020 16:24:32 GMT -5 StrawberryBlondie said:

Not to mention some states limit the number of times you can take it after failing.

Yep, same in medicine. You'll have a very difficult time getting licensed in states if you've failed X number of times. 
I have a family friend who finished residency many years ago but was having such a hard time passing her board exams.
She had 1 final attempt for her state and finally passed. 

All sort of life events could happen in which you might longer want to or be able to make $500,000 a year.
Not that I ever wanted to be a ophthalmologist for example, but I certainly didn't have the research or step scores to become one. So I'm in one of the lower paying specialties by choice because that's what I love, but how was I supposed to know that when I started taking out loans?

I think same in therapy. There are the costs for then to process your applications, the costs of the tests, then your license. And you don't know if you'll like it or be any good at it until you're most of the way through your Masters program. Most of the people I went to grad school with are not working as therapists anymore. Some never did after their practicum (a job you're basically paying for).

[Jalapeñomel]

Jan 10, 2020 20:15:19 GMT -5 tiramisu said:

Jan 10, 2020 20:10:50 GMT -5 wanderingback said:

Yep, same in medicine. You'll have a very difficult time getting licensed in states if you've failed X number of times. 
I have a family friend who finished residency many years ago but was having such a hard time passing her board exams.
She had 1 final attempt for her state and finally passed. 

All sort of life events could happen in which you might longer want to or be able to make $500,000 a year.
Not that I ever wanted to be a ophthalmologist for example, but I certainly didn't have the research or step scores to become one. So I'm in one of the lower paying specialties by choice because that's what I love, but how was I supposed to know that when I started taking out loans?

I think same in therapy. There are the costs for then to process your applications, the costs of the tests, then your license. And you don't know if you'll like it or be any good at it until you're most of the way through your Masters program. Most of the people I went to grad school with are not working as therapists anymore. Some never did after their practicum (a job you're basically paying for).

This is likely a problem in a lot of professions, especially when we are making these decisions at 18, with little to no life experience.

The world is telling young people that they *have* to go to college at 18, regardless of cost, and if they don’t, they’re destined to work at Pizza Hut.

[redheadbaker]

Jan 10, 2020 20:36:52 GMT -5 Jalapeñomel said:

Jan 10, 2020 20:15:19 GMT -5 tiramisu said:

I think same in therapy. There are the costs for then to process your applications, the costs of the tests, then your license. And you don't know if you'll like it or be any good at it until you're most of the way through your Masters program. Most of the people I went to grad school with are not working as therapists anymore. Some never did after their practicum (a job you're basically paying for).

This is likely a problem in a lot of professions, especially when we are making these decisions at 18, with little to no life experience.

The world is telling young people that they *have* to go to college at 18, regardless of cost, and if they don’t, they’re destined to work at Pizza Hut.

Or the market changes while you are in school. 

[Jalapeñomel]

Jan 10, 2020 21:54:09 GMT -5 redheadbaker said:

Jan 10, 2020 20:36:52 GMT -5 Jalapeñomel said:

This is likely a problem in a lot of professions, especially when we are making these decisions at 18, with little to no life experience.

The world is telling young people that they *have* to go to college at 18, regardless of cost, and if they don’t, they’re destined to work at Pizza Hut.

Or the market changes while you are in school. 

While my DH was in grad school, we we going through the recession. When he graduated there were so few jobs, we moved to Peru for work. Even now, the market is so over saturated with people in his field, that he’s the only one from his class who has a job in academia.

[brooke77]

I’m also interested to know the details. I always thought it was incredibly unfair that credit card debt could be discharged in bankruptcy but student loans could not.

[redheadbaker]

Jan 11, 2020 8:14:54 GMT -5 Jalapeñomel said:

Jan 10, 2020 21:54:09 GMT -5 redheadbaker said:

Or the market changes while you are in school. 

While my DH was in grad school, we we going through the recession. When he graduated there were so few jobs, we moved to Peru for work. Even now, the market is so over saturated with people in his field, that he’s the only one from his class who has a job in academia.

I wasn't sure what I wanted to do, but my parents encouraged me towards something with computers, because I was "so good with them." I read how graphic designers were in demand and making $60k a year out of school. Turns out everybody else heard the same thing. I still have not made a 60 grand a year, and I graduated almost 20 years ago.

[imojoebunny]

Having worked with a student who dropped out of medical school (Duke) after 3 years, and having a cousin who graduated from law school, worked in law for 3 years, before suffering through a personal tragedy that left her unable to do work in her field, she now sells cars, I applaud this decision. Student loan lack of ability to be discharged not only encourages universities to allow people to take loans for degrees they cannot obtain or are not adept at working at, but, also, gives them 0 accountability for the cost to return on investment that they are suppose to provide. I am not a fan of free higher ed, that is on the backs of the larger percentage of people who never go to college. College cost need to make sense, not be subsidies from those who choose other paths.

[sent]

We have colleagues graduating with $600K to be a dentist, some close to or even over $1000000 if they specialize. That will happen if you go to a private dental school for 7 years (4 for dental, 3 to specialize) with $100K tuition/year + living in places like NYC, LA. This doesn’t include undergrad debt. I haven’t seen this article discussed yet. It could be huge for some people.

[SusanBAnthony]

If the consequence of this is that people can't get student loans for the current outrageous sums, that is probably a good thing.

[wanderingback]

Jan 12, 2020 22:11:34 GMT -5 SusanBAnthony said:

If the consequence of this is that people can't get student loans for the current outrageous sums, that is probably a good thing.

What do you mean by that?

[wise_rita]

Jan 12, 2020 22:06:55 GMT -5 sent said:

We have colleagues graduating with $600K to be a dentist, some close to or even over $1000000 if they specialize. That will happen if you go to a private dental school for 7 years (4 for dental, 3 to specialize) with $100K tuition/year + living in places like NYC, LA. This doesn’t include undergrad debt. I haven’t seen this article discussed yet. It could be huge for some people.

That is INSANE!

I believe you but, man, I hope you're exaggerating.  WTF.

[sent]

Jan 13, 2020 5:06:33 GMT -5 wise_rita said:

Jan 12, 2020 22:06:55 GMT -5 sent said:

We have colleagues graduating with $600K to be a dentist, some close to or even over $1000000 if they specialize. That will happen if you go to a private dental school for 7 years (4 for dental, 3 to specialize) with $100K tuition/year + living in places like NYC, LA. This doesn’t include undergrad debt. I haven’t seen this article discussed yet. It could be huge for some people.

That is INSANE!

I believe you but, man, I hope you're exaggerating.  WTF.

dentistry.usc.edu/programs/dds/cost-of-attendance/

I’m not even sure USC is the most expensive dental school anymore since a bunch of new private school have opened. One could easily spend 7 years there to become a dental specialist. There have been two specialists on the WSJ and on Dave Ramsey talking about their $1000000 debts. I’m torn because I think this can be a great profession but not at the cost to a family life to pay off that kind of debt. I love teeth a lot but I would have gone insane in the “6 days a week” club a lot of new grads join to make a dent in their loans. I graduated when it was mad cheap compared to this. And my low student loans have allowed me a lot of flexibility especially since I had a health crisis and am now disabled.

[karinothing]

Holy cr@p 1 million in student loans? I had no idea that dentist school was so expensive (I mean I assumed a couple hundred K, but not 1 million). How does someone come back from that, I mean I assume dentist have a decent salary but not one million dollars good.

[sent]

Jan 13, 2020 6:50:30 GMT -5 karinothing said:

Holy cr@p 1 million in student loans? I had no idea that dentist school was so expensive (I mean I assumed a couple hundred K, but not 1 million). How does someone come back from that, I mean I assume dentist have a decent salary but not one million dollars good.

The specialist from the WSJ article is taking advantage of one of the income based repayment options. I don’t know how others manage on a realistic level. I’ve never spoken to a colleague openly about what it means to have debt like this. Most of the stuff I come across is all about bragging about how awesome things are so I don’t know what these people are doing. My general dentist neighbor did mention that she interviews young doctors who tell her upfront that they have to make $X to cover their loans and she’s like “um I can’t afford to automatically pay you that.” The consequence to that is private equity and corporate groups are buying the small private doctors out to be able to offer these grads the salaries they want. But this comes at a cost to patient care.

[karinothing]

Jan 13, 2020 7:03:14 GMT -5 sent said:

Jan 13, 2020 6:50:30 GMT -5 karinothing said:

Holy cr@p 1 million in student loans? I had no idea that dentist school was so expensive (I mean I assumed a couple hundred K, but not 1 million). How does someone come back from that, I mean I assume dentist have a decent salary but not one million dollars good.

The specialist from the WSJ article is taking advantage of one of the income based repayment options. I don’t know how others manage on a realistic level. I’ve never spoken to a colleague openly about what it means to have debt like this. Most of the stuff I come across is all about bragging about how awesome things are so I don’t know what these people are doing. My general dentist neighbor did mention that she interviews young doctors who tell her upfront that they have to make $X to cover their loans and she’s like “um I can’t afford to automatically pay you that.” The consequence to that is private equity and corporate groups are buying the small private doctors out to be able to offer these grads the salaries they want. But this comes at a cost to patient care.

Even on income based assuming they weren't working for a non profit he will have to pay taxes on the amount forgiven in 30 years (which will likely be more than his initial loan balance) since he won't be touching the interest. Ugh, that is horrible. No one should have to take out that  much to get a career, especially not a career that is 100% needed and helps so many people.