Bankruptcy Attorney Remarks on Student Loans for Unaccredited Schools

Law Firm Newswire



Brandon, FL (Law Firm Newswire) August 2, 2016 – A local bankruptcy attorney wants debtors to know that student loans for unaccredited schools are dischargeable in bankruptcy.

O. Reginald Osenton, owner and president of Osenton Law Office, says that recent court cases have clearly established that loans obtained to attend non-accredited educational institutions are not afforded special protections from discharge.

“The fact is, if the school is unaccredited, the loan is not a ‘qualified education loan,’” Osenton said. “That is the term applied to those student loans that are ordinarily protected from discharge, and it does not apply in these cases.”

The cases Osenton refers to include one from 2015 and one from earlier this year. In the former, In re Schwartz, a Ms. Schwartz of California who filed bankruptcy successfully discharged a student loan she obtained for her son. The young man had attempted suicide and, in order to afford the residential treatment he needed, Ms. Schwartz executed a loan agreement with Bank of America, who later sold the loan to National Collegiate Student Loan Trust.

In the more recent case, In re Decena, decided in April, 2016, a New York woman won the right to discharge $160,000 in debt to an overseas, non-accredited medical school.

“In both cases, the educational institution’s lack of accreditation was the deciding factor in determining that the obligations were not qualified education loans,” Osenton said.

Osenton added that even loans to attend accredited schools have been discharged in limited circumstances in recent years.

“Student loans have long been regarded as bulletproof when it comes to discharge,” Osenton said. “But with student debt skyrocketing, many bankruptcy filers are trying new strategies, and some are succeeding. I recommend anyone who has burdensome student debt speak with an experienced bankruptcy attorney.”