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  • Writer's pictureAdrienne Woods, Esq.

Mental Health and Bankruptcy

Updated: Dec 3, 2022

It's time to destigmatize both mental health issues and bankruptcy.

Mental illness can be a contributing factor to bankruptcy - Adrienne Woods, Esq.
Mental illness can be a contributing factor to bankruptcy - Adrienne Woods, Esq.

One of the first clients to come to me when I began my practice was Jack. He was quite young – in his mid 20’s – younger than my typical clients who tend to be more toward middle age. Actually, it wasn’t so much Jack who came to me but his mother. Jack’s mother was very successful and had been supporting Jack for years.

Jack had a variety of credit card and other debts, including a significant amount of student loan debt. I began the conversation much as I always do, simply asking Jack and his mother what they hoped to accomplish by filing for bankruptcy. In essence, what are the goals? I received the usual answer – to discharge as much of the debt as possible.

After reviewing Jack’s financials, I noted that the vast majority of his debt was student loans. I explained to Jack and his mother the very high standard for discharging student loan debt. This was many years ago, long before recent rulings made it easier to discharge private student loan debt. This is when I learned why Jack’s mother had been supporting him. Jack suffered from prolonged and serious mental illness that, despite his very best efforts, had left him unable to hold a job.

Jack suffered from bi-polar disease. For those not familiar, bi-polar disorder is a serious mental disease that can necessitate hospitalization. Unfortunately for Jack, his case was serious. In fact, he’d recently spent three months in the hospital. Additionally, I learned that Jack had been hospitalized on several prior occasions. Although very bright, Jack had not been able to finish his degree, further hampering his ability to get a high-earning job. Jack could earn enough to be somewhat self-sustaining, but it would be impossible for him to ever get a handle on his student loan debt. As his doctors explained, while medication could help manage the situation, Jack would most likely never be able to hold a full-time job.

With this information in hand, I filed Jack’s bankruptcy petition along with adversary proceedings seeking to have his student loan debt discharged. As grounds for discharging the student loan debt, I needed to establish that if Jack were forced to continue to carry the burden, he would not be able to maintain even a minimal standard of living. This standard is otherwise known as the “undue hardship” standard, and it is notoriously difficult to establish. In support, I cited Jack’s medical condition, which legitimately prevented him from taking and keeping full time employment.

Initially, the lenders pushed back. After all, Jack was undeniably young. His condition could change or improve. But the reality was that it was highly unlikely that Jack would ever work at a job that would make repayment of these loans possible. Ultimately, to avoid unfavorable precedent, the lenders voluntarily forgave the loans. This was a great outcome for Jack, who could finally move on and try to live with dignity as a self-sustaining adult.

Some people will read this and ask why Jack went to school at all, given his mental health struggles. I would argue that it is not only best for Jack, but best for society that every person be given the opportunity to achieve their maximum potential – whatever that may be. And you don’t know your maximum potential until you push your limits. Other people undoubtedly will question why Jack’s mother didn’t simply continue to pay his debts. But that removes Jack’s autonomy as an adult, stripping him of dignity to which every person is entitled. It also assumes that Jack’s mother should be responsible for her adult son for the remainder of her life, arguably an unfair burden on her. I’m sure Jack himself would have preferred a different outcome. Having worked with him, I’m certain that Jack would have loved to have been healthy, so he could repay his debts. But that wasn’t the case.

Through bankruptcy Jack was able to discharge obligations impossible for him to shoulder. He was given a fresh start to make the most of the skills he had to succeed by his own measure. His life will always be challenging, but I believe that because of bankruptcy it is better.

Call the Law Offices of Adrienne Woods, P.C. today for a free consultation to see if bankruptcy might be right for you. (917) 447-4321

Attorney Advertising. Prior results do not guarantee similar outcomes.

Note: All names have been changed to protect the privacy of clients of the Law Offices of Adrienne Woods, P.C.


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