Law grad who obtained secretarial job can cancel bar-study loan in bankruptcy, judge rules
A bankruptcy judge in Brooklyn, New York, has ruled that a Pace University law grad can cancel the unpaid portion of a $15,000 loan to study for the bar exam.
The decision (PDF) by U.S. Bankruptcy Judge Carla Craig conflicts with an April 2010 decision by an Alabama bankruptcy judge, the Wall Street Journal (sub. req.) reports. In the prior case, the judge ruled a University of Alabama law grad couldn’t cancel a nearly $10,000 bar-study loan.
The story says Craig’s March 24 decision is the most thorough recent ruling on the issue. Craig ruled the bar loan is not an “educational benefit” within the meaning of the law that generally bars discharge of educational loans.
The 2009 Pace law grad, Lesley Campbell, didn’t pass the bar exam, according to the Wall Street Journal. After graduation, she went to work in a secretarial job at a hotel-management company where she earned $49,000 a year. She has a new job reviewing legal documents and plans to take the bar exam again in February. Her total student-loan debt was nearly $300,000.