Bankrupt Lawyers Can Cancel Bar Exam Debt

A federal judge has ruled that bar-exam loans are different from traditional federal student loans, and that law school grads seeking bankruptcy may cancel out that debt. Loans taken out as grads prepare for the bar exam is “a product of an arm’s-length agreement on commercial terms” and doesn’t fall into the same category as student loans, which stick with a borrower filing for bankruptcy. The ruling is not binding on other courts, but may be cited by other bankruptcy judges. “We’re starting to chip away at the absolute immunity of student loans from bankruptcy,” said Austin Smith of Brewer Storefront PLLC, who represented the lawyer in the case.