It’s not often one hears good things about student loans (and if you do, lucky you), which is why we’re sort of flipping out that this lawyer may have figured out a way to erase your school-related debt in the most lawyer-y way possible. It all comes down to the bankruptcy codes, so first, you’re gonna need a good lawyer.
Because of a law passed in 1978, student loans are one of the only kinds of loans that people can’t “discharge” if they declare bankruptcy, which is pretty insane when you think about the fact that most millennials have missed a student loan payment to cover their basic bills, rent, and grocery bill. Hey, it happens. If anything, bankruptcy laws are meant to protect people like that. And that’s where New York City-based attorney Austin Smith comes in.
Here’s what he’s doing: The only way people can be relieved of their student debt is if they can prove it’s causing them “undue hardship,” which is a really hard legal standard to meet in front of a judge. So instead, he tries to prove that the loan wasn’t exactly a *student* loan, but just any other private loan.
One of his first clients had taken a loan out to study for the bar, for example. She was $300,000 in debt and had failed the bar, and Smith convinced the judge to allow her to file for bankruptcy since she wasn’t affiliated with any university at the time she took out the loan.
If your situation isn’t quite so obvious, you could still have a chance at winning a bankruptcy case. Say, for example, you took out more money than the tuition really cost (you know, so you could live), you might have a case. Or if you took a loan out for an unaccredited program, like career training. Smith has won nine cases across New York, Texas, Minnesota, California, and Connecticut and is working on others, too.
It’s tricky, because a lot of people take out federal loans, but if you took a loan out from a private lender, you might fit the bill.
Smith told CNN:
Even better, he’s setting the precedent for more cases like this. And also making it very clear that the bankruptcy laws are ridiculous and actually hurting people. So excuse us while we go look Mr. Smith up and hug him.