Question: Can I Discharge My Student Loan?
By Andy Miofsky, Illinois Bankruptcy Attorney on Feb 20, 2007 in Debts Not Dischargeable, General Bankruptcy Information, Illinois
Answer: A. Yes; B. No; C. Depends. The Correct answer is C. Depends on where you file. Bankruptcy cases filed in the State of Illinois operate under case law decided by the Seventh Circuit Court of Appeals. The Seventh Circuit addressed the issue of dischargeability of student loans in Matter of Roberson, 999 F.2d 1173 (7th Cir. 1993) when it adopted a test set forth in an earlier Second Circuit case, Bruner vs. New York State Higher Education Services Corp., 831 F.2d 395 (2nd Cir. 1987). Under Bruner, a debtor must satisfy three conditions: First, the debtor cannot maintain, based upon current income and expenses, a minimal standard of living for herself and her dependents if forced to repay the loan; Second, additional circumstances exist indicating that the state of affairs is likely to persist for a significant portion of the repayment period; and, the debtor has made a good faith effort at repayment. The Southern District of Illinois Bankruptcy Court recently applied the Bruner test in the 2006 decision of In re Pritchard. Ms. Pritchard asked the court to allow the discharge of two student loans, one from 1990 and one from 1991. The Court found debtor had not made payment on either loan and made no attempt to repay the loans. Even though debtor claimed she was totally and permanently disabled, debtor did not pass the third prong of the Bruner test and the Court denied discharge of the student loan debts. Under a strict application of Bruner, it is difficult to discharge a student loan in bankruptcy in Illinois.
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