Court of Appeals affirms bankruptcy court holding that student loans were not dischargeable

In Tetzlaff v. Educational Credit Management Corp., No. 14-3702 (July 22, 2015) , the Court of Appeals in Chicago held that the Wisconsin Bankruptcy Court did not err in denying a debtor's request to discharge $260,000 in student loan debt in a chapter 7 proceeding. The debtor was 56 years old, unemployed and living with his mother and subsisting on her social security income. The debtor also had a law degree (but was unable to pass the bar after trying twice) and an MBA. Expert testimony from the psychologist hired by the lender as an expert indicated the debtor was not mentally ill, but instead was a malingerer and may have been feigning illness. The bankruptcy court also found the debtor's talents, including his ability to earn advanced degrees and to write well, defeated his contention that his current inability to pay on student loans would likely persist over significant portion of instant repayment period. Finally, the fact that the debtor made efforts to repay a loan to one school that refused to release his degree absent payment showed that the debtor had the ability to pay given the right incentives, and actually defeated the debtor's contention that he had made a good faith effort to repay his loans.
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