Bankr. W.D.N.C.: In re Magsino- Income Contingent Repayment Plan Precludes Student Loan Discharge


After exhausting her 36 months of student loan deferments for unemployment, the Debtor sought to discharge her student loans in bankruptcy. The Department of Education offered her an Income Contingent Repayment plan (“ICRP”), with monthly payments set, at least initially, in the amount of $0.00 a month.

Even though the Debtor had a very low standard of living, the bankruptcy court held that under ICRP she would have payments of $0.00 a month, her student loans would not cause a minimal standard of living. Further, despite being 61 years old, the court held that “age alone is not an “additional circumstance” determining the second prong. In re Spence, 541 F.3d (4th Cir. 2008). Lastly, the Debtor’s payments of other student loans, but only those that were co-signed, her retention of proceeds from the sale of her home and her decision not to enroll ICRP were all indicative of bad faith.


The existence of the ICRP is not meant to preclude bankruptcy discharge of student loans, but is an alternative. The Debtor here will be under an ICRP until she is 86 years old and has been consigned to a situation where any increase in the income she receives during the remainder of her life, will raise the amount of her ICRP and go to the Department of Education. As such, she has no incentive to work and is done as a productive member of society.

For a copy of the opinion, please see:

Magsino- Income Contingent Repayment Plan Precludes Student Loan Discharge



1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

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