June 11, 2013 at 10:22 PM
Appeals court relieves money-strapped law grad of student debt
Well, here’s one way to get out of your student loans.
A San Francisco-based federal appeals court has ruled that an Oregon law-school graduate who failed the bar exam twice, and missed his third try after locking his keys in his car, does not have to pay all of his student debt.
The case represents a rare instance in which student debt can be relieved via a so-called “undue hardship” provision. But the time it took to get that relief — 10 years — illustrates how difficult it is to succeed.
Michael Hedlund graduated from Willamette Law School in 1997 with more than $100,000 of debt, according to court documents. After failing the bar exam twice and losing his job at the district attorney’s office, he moved to Klamath Falls, Ore., and got a job as a counselor with the Klamath County Juvenile Department.
On his way to take the bar a third time, he accidentally locked his keys in the car while getting coffee. At that point, he basically gave up on being a lawyer.
Faced with enormous student debt, Hedlund filed for bankruptcy in 2003.
The bankruptcy court found he had made a good-faith effort to repay the loans but could not do so and still maintain a minimum standard of living.
An appeals court threw out that decision, ruling that Hedlund hadn’t actually made a good-faith effort and could have lived more frugally.
But the higher court, the San Francisco-based U.S. Court of Appeals for the 9th Circuit, reversed that decision last month, finding the bankruptcy court was right. The San Francisco court ruled that Hedlund needed to pay just $32,000 of the more than $85,000 he still owed.
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The Today File is a general news blog featuring real-time coverage of Seattle and the Northwest. It is reported by the news staff of The Seattle Times and edited by Assistant Metro Editor Nick Provenza.
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