FIFTH CIRCUIT RULES MUSICIAN’S STUDENT LOANS NOT DISCHARGED IN BANKRUPTCY
November 6, 2003
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Editor’s Note: The U.S. Fifth Circuit includes Texas, so this Court ruling is binding on U.S. Bankruptcy Courts located here in Texas. This ruling will make it even more difficult for debtors to cancel or discharge student loans. You basically have to be disabled, and if you are disabled with a doctor’s letter, they will forgive the loan anyway. See my “links” page under bankruptcy and debt relief for more information about that.
The Fifth Circuit Judge, Judge Edith Jones, that wrote this opinion is a very fine judge, but she is not sympathetic to debtors (people that are in debt). She has been “in the running” for a U.S. Supreme Court seat in the past, but so far has not been “promoted.”
Details of Ruling A professional musician’s bid to discharge more than $77,000 in government-insured student loans through a bankruptcy proceeding has hit a sour note with the 5th U.S. Circuit Court of Appeals, Texas Lawyer reported. On October 23, a three-judge panel of the 5th Circuit affirmed a district’s court judgment reversing a decision by a bankruptcy court to discharge the student loan debt of Jonathan R. Gerhardt, principal cellist with the Louisiana Philharmonic Orchestra. In a case of first impression for the circuit, the panel held that a bankruptcy court’s “undue-hardship” determination is subject to de novo review. The 5th Circuit said in the opinion that Gerhardt could obtain additional or different employment to pay off his more than $1,000-a-month debt.
Although testimony at the December 2001 trial tended to show that Gerhardt would be unlikely to find a position at a higher-paying orchestra, he could seek additional steady employment in other areas, the 5th Circuit said in the opinion. “In addition, nothing in the Bankruptcy Code suggests that a debtor may choose to work only in the field in which he was trained, obtain a low-paying job, and then claim that it would be an undue hardship to repay his student loans,” Judge Edith Jones wrote for the court.
