Supreme Court rules for bankrupt student in dispute over loan repayment
By APTuesday, March 23, 2010
Court sides with debtor in student loan case
WASHINGTON — A unanimous Supreme Court has ruled in favor of a man who wanted his student loans dismissed through bankruptcy without having to prove that paying the money back would cause an “undue hardship.”
Justice Clarence Thomas said Tuesday in his opinion for the court that debtors must normally prove undue hardship. Thomas said the bankruptcy judge was wrong to approve Francisco Espinosa’s bankruptcy plan in 1993, but the lender did not object at the time. The judge’s error was not serious enough to undo the agreement, Thomas said.
The case involved a dispute over $4,582 in interest on Espinosa’s four student loans.
The case is United Student Aid Funds v. Espinosa, 08-1134.
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