A federal judge just denied a student-loan borrower's request to postpone her $95,000 debt cancellation hearing as she undergoes cancer treatment

• In March, a judge agreed to postpone Heather Smart's student-loan bankruptcy hearing due to medical treatment.
• But he just ruled she must proceed with her trial unless she can prove she is medically unable.

Three months ago, a federal judge ruled Heather Smart can postpone her hearing to get rid of her student debt through bankruptcy as she undergoes cancer treatment. Now, that same judge says it's time for Smart to go to court.

Smart filed for bankruptcy of her $95,181.92 student debt load in December because of unemployment caused by "receiving extensive medical care and treatment for myriad issues relating to several forms of aggressive and invasive cancer, as well as a blood disorder," according to a court filing. She claimed her situation prevented her from making sufficient income to pay off her loans.

The Education Department wrote at the time that Smart did not qualify for bankruptcy discharge because when her "health improves, she has college degrees and is capable of maintaining full-time employment and can maintain an appropriate standard of living while repaying her loans." But a US bankruptcy judge for the Southern District of Texas allowed her to postpone her hearing while she was undergoing treatments.

Last week, Smart requested further postponement of her hearings because she "is currently in the lengthy process of diagnosing, planning, and executing a treatment plan for myriad medical issues," including cancer and a blood disorder, per the court filing. She is waiting to find out whether her disability is permanent, which could significantly impact the outcome of her student-loan repayment.

The judge denied Smart's request.

"Trial in this case has been set and then reset on numerous occasions," Judge Jeffrey Norman wrote. "This matter must be concluded. An indefinite suspension does not do justice."

He added that the court will consider an extension of the trial date only if Smart "is medically unable to participate virtually," and she must prove that inability by "reliable evidence and give an estimate of when she will be able to appear for trial."

Since Smart could not provide evidence of her medical condition at the time due to her doctors being unavailable, she requested time to re-file claims, and the judge granted her that request.

The Education Department also granted Smart a Cancer Treatment Deferment on her loans, meaning she is not required to pay off her debt through October 2023 and interest will not grow — but even being in long-term deferment, the judge is still requesting she proceed with the trial.

Proving bankruptcy on student loans in court is no easy feat. The borrower must prove an "undue hardship" standard, that requires them to show that they cannot maintain a minimal standard of living, their circumstances will likely not improve, and they have made a good-faith effort in repaying their debt. But successfully meeting that standard is rare and many borrowers have been blocked from relief because of it, which is why Biden's administration promised to reform the bankruptcy process.

"The process doesn't work well. It needs to be reformed … and we're committed to doing that," Federal Student Aid head Richard Cordray told a House education subcommittee last fall. "There have been discussions already with the Justice Department. They, too, are willing to have us revise our approach."

Since then, though, the Education Department has continued to oppose borrowers' discharge requests in court. Under Secretary of Education James Kvaal said during a virtual discussion on student debt on Monday that "Secretary Cardona has said we want to review that policy, and that is something that is underway now. There's an interagency process for that, it's not solely within the department's discretion, and we're working quite hard on that. actually."

But advocates say the process needs to be sped up. Dan Zibel, vice president and chief counsel of Student Defense — an organization that advocates for borrowers' rights — said in a statement that "time after time, we continue to see the government erecting barriers that make it harder for bankrupt borrowers seeking a discharge of their student loans."

"Although the Department of Education has publicly acknowledged the problems, to date, we have seen little in terms of concrete policy changes, and borrowers facing extreme hardship are paying the price," Zibel said. "Enough is enough."