Attorney General Phil Weiser urges U.S. Attorney Finegan to provide grace to student loan borrowers in bankruptcy
March 10, 2022 (DENVER)—Attorney General Phil Weiser today urged U.S. Attorney for the District of Colorado Cole Finegan to carefully evaluate federal student loan bankruptcy cases to be sure that borrowers who face “undue hardship” in repaying their student loans receive the grace promised to them in the Bankruptcy Code.
The Bankruptcy Code provides that an educational loan is dischargeable in bankruptcy when borrowers can show “undue hardship.” In recent weeks, the U.S. Justice Department, on behalf of the U.S. Department of Education, has withdrawn two appeals of discharges of federal student loans for two borrowers in bankruptcy proceedings. The Justice Department has noted that the Department of Education is currently considering issues related to the undue hardship standard.
“The past two years highlighted the challenges student loan borrowers can face and the importance of grace for those in difficult circumstances,” Weiser said. “It is important that student loan borrowers facing bankruptcy have a clear path to having their loans discharged as promised in the Bankruptcy Code. I encourage the Justice Department to carefully consider its role in such cases and to extend grace to student loan borrowers who face an ‘undue hardship’ in repaying their loans.”
In the letter, Weiser said that showing grace could include considering what arguments the office chooses to make about the application of the “undue hardship” standard or exercising discretion about whether to engage in the adversary process if borrowers are experiencing difficult circumstances, such as dependence on public benefits or an ongoing state of poverty.
A Colorado student loan ombudsperson in the Attorney General’s Office is available as a resource for student loan borrowers throughout the state at studentloans@coag.gov or (720) 508-MySL (6975). Borrowers struggling with their student loans can click here for more information or to file a complaint with the student loan ombudsperson.
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