Vera Thomas scraped together enough money with the help of about $7,000 in student loans to attend community college for two semesters to try to better her job prospects.

That was in 2012. Two years later, unemployed and steeped in debt because of a worsening health condition called diabetic neuropathy, she quit paying on her loans. She has muscle weakness, pain and numbness.

Thomas, 62, filed for bankruptcy last year. Her credit card balance, medical bills, car loan and other expenses were wiped away. But the one debt that’s hounded her the most — her student loans — is still there.

Bankruptcy for Thomas and others like her is not the fresh start for which it was designed.

“I’m walking on eggshells every day,” she said. “I have applied for so many jobs. I think they look at my age, and I haven’t had any luck.”

Thomas has few belongings. Everything she owns can fit inside a mid-size sedan. She’s on food stamps, and her two-year job hunt hasn’t gone well. Her case illustrates how difficult it is for borrowers to discharge student loan debt in bankruptcy even when they are poor, unhealthy and facing a bleak financial future. Consumer advocates say that’s due to outdated laws Congress created years ago as well as judges who have strictly and narrowly interpreted the law.

"She's the type of consumer that bankruptcy should provide some relief for," said John Rao, staff attorney with the National Consumer Law Center in Boston.

Judge Harlin Hale, the Dallas bankruptcy judge in Thomas' case, said he felt a "great deal of sympathy" for Thomas in his December 2017 order but said that his hands are tied due to legal precedent. The "demanding standard" adopted by federal courts in the 5th Circuit that includes Dallas says borrowers must show "total incapacity" to pay their student loan now or in the future in order to erase the debt, the judge said.

Consumer lawyers like Rao say that interpretation is contrary to the plain language of the law that requires a showing merely of “undue hardship.” But the bankruptcy law does not define that term, leaving it up to judges to interpret it. Some recent legal challenges in other states, including Massachusetts, have successfully freed borrowers from student loan debt. But Texas seems to offer little chance of such a result.

Hale said that in his 15 years on the federal bench, he has never discharged a student loan over the objection of a lender. He wrote that because people are increasingly being forced into bankruptcy due to student loan debt, more legal guidance from higher courts is needed to help judges like him deal with the growing problem.

Inside the United States Bankruptcy Court of the Eastern District of Texas in Plano (Andy Jacobsohn / Staff Photographer)

Thomas' attorney, Noah Schottenstein of Dallas, says he will appeal Hale's decision. Schottenstein said judges took a legal standard established by the law and "ratcheted" it up.

“It imposed a burden on people who are least able to afford it,” he said. “There are a lot of people who need relief and have been unfairly barred from getting it.”

Liz Hill, press secretary at the U.S. Department of Education, issued a statement in response to a request for comment.

“We are looking closely at the best ways to provide help to students in these often difficult circumstances,” she said. “We work with the Justice Department to ensure that each matter is handled based on its individual facts and circumstances under the law."

Student loan debt in the U.S. has reached $1.4 trillion and grows every year. In Texas, the number is about $90 billion. Recent data shows that about 4.6 million U.S. borrowers are in default on their student loans.

Thomas still has no income and needs to find a new place to live soon. But the interest on her student loans continues to accrue. She needs $7,806 to pay off her loans.

Thomas, who’s never been married, has a high school diploma and experience working in call centers. None of her jobs paid more than $25,000 a year.

Now she says she has no choice but to continue looking for a job to try to pay off the loans.

“I know I’m getting older, but I want to do as much as I can for as long as I can,” she said.

Bankrupt

Thomas moved years ago to Virginia to help her sister and found a job at a call center where she worked for almost 12 years. In 2012, she enrolled in Thomas Nelson Community College in Hampton, Va., where she took night courses, hoping to earn a criminal justice degree and possibly work someday as a probation officer.

Thomas took out two loans, each for $3,500, in 2012.

But her classes required computer knowledge that she didn’t have. She failed a course because her computer broke down and she wasn’t able to submit homework. The pressures of balancing work and college became too much. Her second semester was her last.

Thomas said she made a couple of student loan payments, which came to about $77 per month, but then started having car problems. She scraped by. “It got to the point where I hardly had any food to eat,” she said.

She was fired in 2016 after a dispute with her manager. She made $16,800 that year.

It was then that she moved to Glenn Heights to be with her boyfriend.

Vera Thomas holds the judgment that denied her petition to discharge her student loans when she filed for bankruptcy. (Ron Baselice / Staff Photographer)

After a few brief stints, including a job at Whataburger, Thomas filed for Chapter 7 bankruptcy. She listed $3,000 in assets in her 2017 filing and more than $30,800 in liabilities. Her possessions amounted to a 2007 Chevy Impala worth $3,000, a 42-inch television, shoes, clothes, 60 cents in a bank account and some Avon costume jewelry.

Thomas’ ex-boyfriend, whom she’s known since the third grade, is currently supporting her. She lost her car but borrows his for job interviews. But their relationship recently ended, and she needs to find somewhere else to stay. Ricci Epperson, the ex, said, “It’s been rough.”

Thomas has been denied unemployment compensation and Social Security disability. Her neuropathy, a type of permanent nerve damage, causes painful tingling in her hands, feet and arm. She can’t stand for long. Even wearing slippers for too long is painful. She describes it as a feeling like “someone’s stabbing you.”

She also said she has cataracts in one eye that cause blurry vision. She doesn’t qualify for Medicare but has received care under a charitable program at Parkland Memorial Hospital.

Hopeless future?

Most people in similar circumstances can't afford to sue. Schottenstein took Thomas' case for free after she applied for legal aid. He said in his court filing that due to Thomas' age, her failing health and her lack of education, she has "no reasonable job prospects."

He went after the commonly accepted interpretation of the law.

“If Congress intended to provide relief from educational debt only to persons who were indubitably incapable of earning a living, Congress would have said as much,” Schottenstein said in the filing.

Donna K. Webb, an assistant U.S. attorney in Dallas who represents the Department of Education, opposed the action and cited the three-pronged “Brunner test,” which emerged from a 1987 student loan discharge case and has become the most common standard used by courts.

It requires a showing of extraordinary circumstances such as serious disability or extreme poverty, which consumer advocates like Rao and even some bankruptcy judges say is outdated and overly harsh.

Under Brunner, borrowers must show that: They cannot maintain a minimal standard of living if forced to repay the loan; that circumstances indicate their situation is likely to “exist for a significant period;” and that they have made “good faith” attempts to repay the loans.

Webb said Thomas failed all three prongs.

“Tight finances are not sufficient,” she said in her filing, adding that Thomas has the ability to maintain a sedentary job. “Thomas has failed to establish her financial situation will not improve in the future.”

Vera Thomas in her Glenn Heights residence on Jan. 17, 2018. A judge ruled that her student loans did not create an undue hardship for her despite her health problems and unemployment. (Ron Baselice / Staff Photographer)

Webb also said the Social Security Administration denied Thomas' application for disability, finding that she was "not disabled from all gainful employment."

In his Dec. 20 ruling, Hale said Thomas met the first but not the second prong of the Brunner test. Under that standard, “dire financial conditions” are not enough, he said.

“Ms. Thomas conceded that she is unable to show she is completely incapable of any employment now or in the future,” Hale wrote.

The second prong — proving a hopeless future — is the most difficult and one critics say has put courts in the position of attempting to act as soothsayer. You have to show it’s likely you’ll never be able to repay your student loans, or as Dallas bankruptcy courts have ruled, you must show “total incapacity.”

Rao has argued in other cases that undue hardship should be based on facts, not conjecture and “unsubstantiated optimism” about a person’s future prospects.

“Life has many twists and turns that are unforeseen, making it impossible to forecast with precision a debtor’s condition in 10 or 20 years [as some courts have required],” he said in a 2015 filing in a separate case.

Schottenstein said people who need relief the most have the “hardest [legal] test in federal law to meet, or one of them,” referring to the Brunner test.

“Who can prove what will happen in the future? It’s unjust and unfair,” he said.

Hale, the judge, conceded that the standard has created an “incredibly high burden” but said he was bound by 5th Circuit precedent. He wrote in his order that “guidance on the standard to apply” would greatly help him and other bankruptcy judges with such cases in the future.

Dallas bankruptcy courts’ interpretation of undue hardship to mean total incapacity is not applied to other forms of consumer debt in bankruptcy like credit cards.

Courts in other circuits have used a less stringent standard called "totality of the circumstances," which takes into account a variety of factors.

Clarity on the matter would take a new law from Congress or a ruling from the U.S. Supreme Court, neither of which is likely anytime soon, legal experts say. But if Thomas’ appeal is successful, it could at least give Texas student loan borrowers more relief in bankruptcy courts.

‘Deferring the inevitable’

The Department of Education, which typically opposes student loan discharges, argues that the financial integrity of the student loan program is at stake. Their concern, according to Rao, is that “it’ll open up the floodgates.”

The department points out in these lawsuits that struggling borrowers can enroll in income-based repayment plans, which allow for lower monthly payments stretched out to as many as 25 years.

But critics like Rao say that can create an even bigger financial burden for those unable to pay over a long period because of mounting interest. They say some loans will never be paid off as a result, and that the payment plan defeats the purpose of bankruptcy, which is to offer people a fresh start.

Rao called such government efforts “deferring the inevitable.”

Although lawsuits like Thomas’ are increasingly winding up in bankruptcy court, few are successful, legal experts say. It requires a separate lawsuit in bankruptcy court, which can drag on for years and which few people in financial trouble can afford.

Some people have won student loan discharges elsewhere.

One of them was Robert Murphy, who in 2016 won his effort to erase more than $246,000 in loans he borrowed to send his three children to college. In that closely watched Massachusetts case, a federal appeals court sided with Murphy after a four-year court battle he waged against the Department of Education.

Murphy, 65 at the time, had lost his job as president of a manufacturing company and wasn’t able to find work for 13 years. His lawyer took up his case pro bono and called it a David vs. Goliath struggle.

The case was settled on the urging of the appeals court, thus avoiding a binding opinion that could act as a legal precedent.

Rao, who filed a brief supporting Murphy, said the type of borrower who concerns him the most is the person who, like Thomas, has some college study but never earned a degree. They are not even able to use their education, he said, but the student loans remain a lifelong burden.

“You basically carry it with you to your grave,” he said.

Thomas said she thinks the legal system doesn’t treat everyone equally. If some people can get six-figure student loans wiped out, she said she also should be able to get some relief.

“I can’t predict what other people will do. A lot of people don’t care,” she said. “If you’re low on the totem pole, it’s sorry, you’re out of luck.”