The resolution of bankruptcy litigation involving individuals under the governmental student loan programs and family farmers under Chapter 12 of the Bankruptcy Code provides an intriguing insight into congressional policy. That divergence is especially prominent in the treatment of "disposable income" under these two statutory provisions. When deciding issues relating to whether income should go to unsecured creditors or be used to offset future farming costs, courts tend to interpret the Code in favor of debtors; conversely, the Code creates, and courts perpetuate through their rulings, a clear presumption against discharging student loan obligations. The debtor will prevail only if at "undue hardship" can be shown. This paper looks at these "fresh start" differences by analyzing legislative history and case law and making recommendations, including suggested statutory revisions, in order to offer a more balanced and equitable treatment of the two debtor groups.
Northern Illinois University Law Review
Kratzke, Nancy H. and Depperschmidt, Thomas O.
"The Disparate Treatment of Student and Family Farmer Debtors: Suggestions for Statutory Reform of Bankruptcy Policy,"
Northern Illinois University Law Review: Vol. 16:
1, Article 7.
Nancy H. Kratzke and Thomas O. Depperschmidt, The Disparate Treatment of Student and Family Farmer Debtors: Suggestions for Statutory Reform of Bankruptcy Policy,16 N. Ill. U. L. Rev. 25 (1995).