Obama Administration Attempts Blocking Bankruptcy Courts from Reducing Education Debt

by San Antonio Attorney

A week after the Obama administration encouraged Americans to reduce education debts in bankruptcy courts, the same administration is blocking those courts from reducing other forms of student debt.  A solid example of this predicament is a 65 year old man named Robert Murphy, who accumulated $246,000 worth of education debt for himself and his children due to a federal program known as Parent Plus loans.

Murphy testified to a federal bankruptcy court, verbalizing that he can’t pay back the loans since he is unemployed. Murphy emphasized that even if he were employed with a salary of $50,000 per year,his student debt would balloon to $500,000.

The Department of Education, under the Obama administration, urged the federal judges not to cede any grounds to any debtor. However, the same sector also tried to block the write-off of Murphy’s debts, which clashed with the department’s announcement last week.

Last week, the administration announced its desire to withdraw the law Biden created.  This law gave students a hard time in discharging private education loans.  The bankruptcy restrictions on both public and private loans were created by Biden for almost thirty years of creating proper bankruptcy legislation in the U.S. Senate.

Before Biden’s work, bankruptcy courts were more lenient and allowed Americans to reduce their public and private student debt. Biden backed a series of legislative initiatives making the process of reducing debt more tedious in court.

“There are strong grounds for maintaining different standards for federal student loans,” said a representative of the administration.

“Federal loans are not underwritten, have generous terms and protections, and the payments can be limited based on income.  Private student loans, by contrast, are underwritten and most do not have a built in income-driven repayment plan,” the representative further added.

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