On October 17, 2022, Student Defense and Latife Neu of Neu Law, PLLC filed a lawsuit against the U.S. Department of Education seeking a student loan discharge on behalf of Zena Dodson, a financially distressed public school employee in Washington State. The lawsuit calls on the Department of Education to discharge the borrower’s $78,715 of student loan debt, which originated from an $18,955 student loan the borrower took out in the late 1980’s. Dodson’s case is the most recent among a litany of cases that underscore the need to reform student debt bankruptcy policies.
Ms. Dodson has made a good faith effort to pay back her loans since entering repayment in the early 1990s, and she was granted Chapter 7 bankruptcy protection in 2014. However, under federal bankruptcy law, discharging student loans requires a separate legal proceeding such as this adversary case. Dodson currently supports both of her adult daughters and a granddaughter and has no significant financial assets.
Update: On April 21, 2023 a federal bankruptcy court discharged more than $78,000 of federal student loan debt under newly implemented guidance from the Department of Education and the Department of Justice. Zena Dodson was granted relief for loans that totaled just $18,955 when she borrowed the funds in the late 1980’s, which more than quadrupled in the three decades since then. A press release can be found here.
News Coverage
Student-Loan Holders See New Path for Wiping Out Debt Through Bankruptcy | November 21, 2022 | Wall Street Journal