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8th Circuit Says Lawyer Can’t Discharge $360K in Student Debt

Posted Jul 10, 2009 1:11 PM CDT
By Debra Cassens Weiss

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A federal appeals court has ruled that a Minnesota lawyer can’t discharge more than $360,000 in student debt in his Chapter 7 bankruptcy.

Mark Allen Jesperson had claimed he shouldn’t be responsible for paying the loans under an “undue hardship” exception to the general rule that student loans can’t be discharged, the National Law Journal reports. But the St. Louis-based 8th U.S. Circuit Court of Appeals said Jesperson’s $48,000 annual income was due to “self-imposed limitations” and he should not be exempted from payment.

Jesperson graduated from Lewis & Clark Law School in 2000, and then held three jobs, all of which he quit for a variety of personal reasons, the opinion said. His first job was as a judicial clerk in Saipan, his second was with Alaska Legal Services and his third was with Kelly Services as a temporary worker. Next he landed a job at another placement agency, Spherion Professional Services.

The July 8 appeals court opinion noted a bankruptcy court’s finding that Jesperson’s “record of work experience is besmirched by a patent lack of ambition, cooperation and commitment.”

Jesperson is young, in good health, with marketable skills and no physical or mental impairments, the court said. He also has access to generous repayment plans, the court added.

“A debtor is not entitled to an undue hardship discharge of student loan debts when his current income is the result of self-imposed limitations, rather than lack of job skills, and he has not made payments on his student loan debt despite the ability to do so.”

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