Daily Archives: March 26, 2016

Bernie Sanders releases a great ad featuring Rep.Tulsi Gabbard

Judge Says Bankrupt Law Grads Can Cancel Bar Loans

A federal judge ruled law-school graduates who file for bankruptcy protection can cancel the debt they racked up while studying for the bar exam, finding such loans are different from traditional federal student loans that are rarely canceled by bankruptcy.

In an opinion filed Thursday, Judge Carla Craig of the U.S. Bankruptcy Court in Brooklyn, N.Y., said bar-exam loan debt is “a product of an arm’s-length agreement on commercial terms” and doesn’t fall into the category of student loans that stick with a borrower who files for bankruptcy.

The decision, which is the most thorough recent ruling on the matter, contradicts the widely accepted notion that student loan-related debt can be canceled in bankruptcy only under rare cases of extreme financial hardship.

In her 20-page ruling, Judge Craig said bar-study loans were akin to commercial or consumer loans and weren’t an “educational benefit,” like a scholarship or stipend, and thus could be erased in a bankruptcy case.

The case involves 36-year-old Lesley Campbell, a 2009 Pace University School of Law graduate who had asked the court to cancel the unpaid portion of a $15,000 loan she took out from Citibank to study for the bar.

Ms. Campbell, a Brooklyn resident, didn’t pass the bar exam after graduating in 2009 and took a secretarial job with a $49,000 annual salary at a hotel management company, she said. She filed for bankruptcy in 2014.

Read on.