A former lawyer was found to be so mentally unbalanced that he is unable to work at more than menial jobs, says this bankruptcy court opinion by highly respected U.S. Bankruptcy Judge Joan Feeney of the District of Massachusetts. He was able to have his student loans discharged in bankruptcy. In re Ablavsky, Bankr. Court, D. Massachusetts 2014.

What's notable to me is that although the debtor put on expert testimony by no less than a Harvard-trained psychiatrist, the Dept of Education and the other student loan creditor still argued that the debtor was not entitled to an undue hardship discharge.

And of course the Department of Education argued that the debtor had not participated in any of its alternative repayment options, or applied for a disability discharge using the DOE's administrative procedures. Of course neither of those options are mentioned in the Bankruptcy Code or required by the statute to receive a hardship discharge in bankruptcy.

The Court explained the "Brunner test" and the "totality of the circumstances test" and found that the debtor was eligible for a discharge under either test. And even though the debtor had pled guilty to the crime of destroying a court file when he was a lawyer, the court found that his actions were the result of his mental illness, not that he was a criminal that brought it all on himself.

What does it take before the Dept of Education will concede one of these cases? What do you think should have happened in this case? Do you think this was the correct result? Please post your comments below.

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