A grandmother who had nearly $90,000 in student debt had her loans cancelled by a bankruptcy court in Nebraska, adding to an emerging trend of student loan borrowers successfully finding relief through personal bankruptcy.
“Most of my clients are surprised to hear that they can get their student loans discharged,” Mudd’s lawyer, Lea Wroblewski, an attorney and the director of the debt and finance unit at Legal Aid Nebraska, told Yahoo Finance.
Jamie Mudd attended college in California and earned associate’s degrees in culinary arts and medical science, incurring debts from 26 federally-backed education loans between 2006 and 2015 to attend two schools. In 2015, she moved to Nebraska and began working multiple retail jobs. In 2019, Mudd’s developmentally-challenged grandson moved into her one-bedroom apartment and she obtained temporary guardianship.
Escalating financial troubles — including $89,525.38 in student loans with a daily interest accrual of $14.31 — led Mudd to file for chapter 7 bankruptcy in June 2019 and an adversary proceeding in October 2019. The Education Department (ED) initially denied her request for cancellation, but U.S. bankruptcy court in Nebraska ruled in December 2020 that all of Mudd’s loans should be discharged.
“Mudd has made a good faith effort to maximize her…