Supreme Court Unanimously Backs Borrower Over Lender

March 24, 2010

The U.S. Supreme Court on Tuesday sided with a borrower whose student loans were discharged in bankruptcy without his having proven that the payments were an "undue hardship" on him, as bankruptcy law typically requires. In its unanimous, narrow ruling in the unusual case, United Student Aid Funds v. Espinosa, the court found that a bankruptcy judge was wrong to have released Francisco Espinosa from his debt without ensuring that he met the undue hardship requirement -- but that the guarantee agency seeking to collect the loans was given a chance to object, and did not in due time.

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