A choice this month from the Bankruptcy Court in Manhattan (SDNY) may have a significant effect on the marketplace 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 ruling that is new 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 right right straight back from the “myth” that it is “impossible to discharge student education loans. ”
The debtor is really a Navy veteran whom graduated from legislation college in 2004, but worked as a lawyer only briefly. He missed fairly few re re 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 discovered that the debtor had shown the hardship that is“undue required by statute and came across the Second Circuit’s three-part test for release, which goes to 1987. The court published: “For a variety of petitioners like Mr. Rosenberg, who’ve been away from college and suffering education loan financial obligation for quite some time, the test is pretty simple and straight-forward. Weiterlesen