Paul L. Caron

Tuesday, May 22, 2012

Bankruptcy Court Finds Undue Hardship, Discharges $340,000 Student Loan Debt of Former Law Student With Asperger Syndrome

National Law Journal, Asperger Syndrome Prompts Court to Forgive Former Law Student's Debt:

A former law student has won a bid in bankruptcy court to discharge nearly $340,000 in education debt because her diagnosis of Asperger Syndrome rendered her unable to repay the loans. The U.S. Bankruptcy Court for the District of Maryland on May 17 found that Carol Todd, who attended the University of Baltimore School of Law, met the difficult burden of showing that she would suffer undue hardship if forced to repay her debt.

Todd, who received her high school general equivalency diploma during the late 1980s, at the age of 39, began attending law school in 1992 but did not finish, according to the opinion. She went on to obtain a master's degree from Towson University and a Ph.D. from an unaccredited online school in 2007. She filed for Chapter 7 bankruptcy in 2009. At the time of her trial, she was 63 and owed $339,361 to three student loan creditors.

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I will bet that the actual principal of these multiple loans was much less than the $340,000.

When she went into default, a penalty of 25% can be added.

When she went back into some kind of schooling, her loans went into deferment, but she didn't have to make payments.

Then she got out, maybe defaulted again, another 25%... had to go back into an accredited school...

Just a guess. I have heard similar snowballing stories but I don't know if that's the case here.

Posted by: luagha | May 22, 2012 1:17:16 PM

1. Buy luxury goods. Buy luxury vacations. Default on repayment. Dischargeable in bankruptcy.
2. Run up big IRS tax bills. Don't pay. Dischargeable in bankruptcy.
3. Attempt to better yourself through education. Can't pay. Not dischargeable in bankruptcy.

18 is old enough to sign your life away to student loan servitude, but not old enough to buy a beer. It's generational warfare. And the young are too young to know it.

Posted by: Tax Attorney | May 22, 2012 9:47:55 AM

This is the type of personal trajectory--accumulate useless degrees and massive debt, then find some legal loophole to evade your responsibilities--we are encouraging in today's USA. We really are doomed.

Posted by: b | May 22, 2012 9:37:19 AM

This is another of the ever-increasing tales in which one cannot find rationale in even one sentence, let alone the whole.

GED at the age of thirty-nine,, law school (DNF) in '92, Masters (unknown), Ph.D--unaccredited online "school", and over one-third of a million dollars in student loans at age 63.

Who was/were the "brilliant" individual(s) that approved such loans?


Did ANYONE see an upside to this?

Posted by: TomsRight | May 22, 2012 9:30:15 AM

Then surely there should be provisions to allow prospective lenders to deny loans based on disability?

Posted by: Tomas | May 22, 2012 9:21:08 AM

$340,000? She should have been cut off from financial aid LONG before she reached that amount. Sounds like Financial Aid programs need risk assessment.

Posted by: jay | May 22, 2012 9:11:00 AM

So now I get to repay this lifetime student's education debt. Great!

Posted by: Glen H | May 22, 2012 8:25:35 AM

Interesting- I have a BS from Towson- a few of my friends went to Baltimore School of law.

She completed her Masters (in what?)- but not her law degree- and got an online Phd (?)

I am just confused how she could proceed so far but be considered handicapped to an extent that she couldn't work (part of the legal argument). She must have had some work skills to get her Masters- even if you ignore her online Phd-

The little I know of Asbergers (my sister works with autistic spectrum kids and says I might have some traits- be on the low end of the scale)- is that it can vary widely- Hmm- I'll go doctor shopping if it can get me out of some debt!

There is an interesting contradiction here- universities used to LOVE to take in the handicapped student- made them look like progressive saints-

Well- if these students - who- lets face it- often benefit from obscure affirmative action formulas to some degree- claim they can't actually work and repay their debt- hmm- lets see these students start to disappear from campuses-

Posted by: Mastro | May 22, 2012 8:20:58 AM

The University of Baltimore allowed her to enroll and encouraged her to borrow the money knowing that they had no downside. If she succeeded, the school had a successful alumni with a good story. If not, the taxpayers are stuck with the bill and U of B's reputation stays where it is at 2nd rate. This is a perfect example of why the lenders should require the schools to have some liability on the debt if the student defaults.

Posted by: Bart | May 22, 2012 8:03:18 AM

She used the courts to scam almost a half-million dollars from student loan creditors? She deserves an Honorary JD!

Posted by: Diggs | May 22, 2012 7:59:26 AM

What rational market would loan a woman who gets her GED at 39 over $300,000? It doesn't much matter if she got the loans forgiven in bankruptcy, they weren't every going to get their money anyway.

Posted by: Kazinski | May 22, 2012 7:49:32 AM

In other words, she lived off loans for 20 years until "retirement" age.

Posted by: Lee | May 22, 2012 7:37:53 AM