On April 4, 2016, the U.S. Bankruptcy Court for the Eastern District of New York issued a decision that may significantly change the landscape of student debt relief. In re Decena, No. 15-72903, 2016 WL 1371031 (Bankr. E.D.N.Y. Apr. 4, 2016). Per Judge Robert Grossman, the court discharged the student loan of a hapless medical school graduate who studied at a non-accredited medical school in West Africa. The court found that the loan did not fall under the exceptions to debt relief in the federal bankruptcy code, which would have prevented the court from discharging the debt.
The debtor studied at St. Christopher’s College of Medicine in the country of Senegal, where she graduated in June 2004. She enrolled at that medical school based on the school’s misrepresentation that it was an accredited medical school, which would have permitted the debtor to sit for U.S. medical board examinations to qualify for medical practice. When she returned to the United States, she discovered that she in fact ineligible to sit for the exams.
To pay for her studies, she had applied for a student loan with Citizens Bank, a Rhode Island based private banking institution. That loan application indicated that the school was St. Christopher’s College of Medicine, which is not on the Federal School Codes List of eligible education institutions for student loans. However, the application used the code for a school based in Berlin, Germany, which is not affiliated with the Senegalese school. Although the debtor attempted to repay the loan from 2006 to 2011, she came up $161,591 short in her repayment to Citizens Bank.
In July 2015, the debtor filed a voluntary petition for bankruptcy under Chapter 7 of the Bankruptcy Code. In October 2015, she filed a complaint for declaratory judgment against Citizens Bank, seeking to declare the student debt as discharged in bankruptcy. Because Citizens Bank did...
