A choice this month out from the Bankruptcy Court in Manhattan (SDNY) might have an impact that is significant industry for education loan securitizations. Education loan asset-backed securities (SLABS) are unsecured, but market individuals typically assume that the underlying figuratively speaking aren’t dischargeable in bankruptcy. a brand new ruling by the main judge of this SDNY’s Bankruptcy Court challenges this presumption.
In Rosenberg v. N.Y. State Degree Services Corp. (Jan. 7, 2020), Chief Judge Cecelia Morris discharged the student that is debtor’s and vigorously pressed right right back from the “myth” that it’s “impossible to discharge student education loans.”
The debtor is just a Navy veteran whom graduated from legislation college in 2004, but worked as a lawyer only briefly loans based on income. He missed reasonably few re payments over 10+ years before filing for bankruptcy, of which time he reported negative income that is monthly.