Using Bankruptcy as a Tool
After attending a consumer law conference, Atlanta Legal Aid attorney Cari Hipp became interested in student loan work. She started to notice that many clients contacting Legal Aid about consumer debt also often had issues with student debt, and these issues pervaded their lives.
Cari explains, “People like our clients go to school to get an education and a better job – to make better lives for themselves and their families. Unfortunately, some discover later that their school did not adequately prepare them for a lucrative career, and they end up paying toward student debt while working in the same low-income job they had before. Others succeed in school and then face some kind of ordeal, leaving them unable to work or pay their loans and scared of what might happen.”
So when our client, Anna*, approached Legal Aid with anxiety about her student loan debt, Cari was familiar with the burden she was carrying. After getting her degree, Anna worked in her field for several years. But then, seemingly without cause, a few years ago while she was working, she began seeing frightening images all around her. Shocked and afraid, Anna dropped what she was doing, left work, and abruptly drove away. Eventually, she left the state and seemingly disappeared. Her family could not find her, and she was hospitalized several times.
After a difficult year, Anna finally got the right diagnosis and the right medication, and she began rebuilding her life. With the help she needed, she slowly got back on her feet and secured housing so that she could again find stability. But her substantial student loan debt still loomed over her head. She tried to discharge her student loan debt administratively, but the nature of her disability made that process very difficult.
When Anna reached Cari and fellow Legal Aid attorney Nathan Juster, she had no idea what might provide her relief from her huge student loan debt and the credit debt remaining from her time away from home. After research and discussion, Cari and Nathan decided to file a bankruptcy for Anna and to try to bankrupt her federal student loan debt with her other debt. This is not a quick process, and the debtor has to prove that repaying the student debt would be an undue hardship. When the trial approached, Anna became very anxious, so Cari and Nathan prepared a mock trial in the practice courtroom in Legal Aid’s downtown office. The space is dedicated to this purpose – helping clients feel more at ease in a trial environment so that they are as comfortable as possible at the real trial.
At the trial, Legal Aid attorneys had to prove that Anna was never going to be able to repay the loans and that re-paying them would be an undue burden on her, and Anna had to bravely relive some of the hardest moments of her life. It was only several months later when the order was issued that Nathan and Cari could confirm to Anna that all of her student loans were discharged. Anna was overjoyed, and she felt a great relief to be free from this overbearing debt. Out of a sense of thankfulness and generosity, Anna then asked, “How can I volunteer for Legal Aid?”
*Anna is not the client’s real name