As you may know, most student loans are notoriously difficult to discharge in bankruptcy.
But not all loans, according to In re Hilal K. Homaidan (CA2 July 15, 2021). In that decision, the Second Circuit has joined the Fifth and Tenth Circuits and held that private student loans are dischargeable in bankruptcy. The exceptions to discharge for certain student educational benefits contained in 11 U.S.C. § 523(a)(8)(A)(ii), the Court held, do not include private educational loans. Thus, private students loans are dischargeable, period, so the debtor need not show "undue hardship"–the generally applicable and very-hard-to-prove standard. A private student loan is one that is not "made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution." See 11 U.S.C. § 523(a)(8)(A)(i).
Our readers may enjoy the Second Circuit's detailed statutory analysis.
