A determination this month from the Bankruptcy Court in Manhattan (SDNY) might have a significant affect the market for education loan securitizations. Education loan asset-backed securities (SLABS) are unsecured, but market individuals typically assume that the underlying figuratively speaking aren’t dischargeable in bankruptcy. a brand new ruling by the principle judge of this SDNY’s Bankruptcy Court challenges this presumption.
In Rosenberg v. N.Y. State Degree Services Corp. (Jan. 7, 2020), Chief Judge Cecelia Morris discharged the debtor’s student loans and vigorously forced straight back from the “myth” that it is “impossible to discharge student education loans.”
The debtor is just a Navy veteran whom graduated from legislation college in 2004, but worked as a lawyer briefly that is only. He missed reasonably few re re payments over 10+ years before filing for bankruptcy, of which time he reported negative month-to-month earnings. Their education loan financial obligation surpassed $220,000.
Chief Judge Morris unearthed that the debtor had shown the “undue difficulty” required by statute and came across the Second Circuit’s three-part test for release, which goes back to 1987. Read more “Pupil Loan Discharged in Bankruptcy – simply a Blip, or something like that larger?”