YOU BE THE JUDGE WRITING PROBLEM

To finance her education at DeVry Institute of Technology, Lydia borrowed $20,000 from a private lender. After graduation, she could not find a job in her field, so she went to work as a clerk at an annual salary of $12,500. Lydia and her daughter lived with her parents free of charge. After setting aside $50 a month in savings and paying bills that included $233 for a new car and $50 for jewelry, her disposable income was $125 per month. Lydia asked the bankruptcy court to discharge her debt. Would paying this debt impose an undue hardship on her? Argument for Lydia: Although she saves money by living with her parents, she would still have to spend every single penny of her disposable income for nearly 15 years to pay back her $20,000 debt. That would be an undue hardship. Argument for the Creditor: Paying back this debt would not constitute undue hardship because Lydia could easily reduce her expenses. She should not be buying new cars and jewelry. Nor does she have the right to save money when she has outstanding debt.