Student Loans

The 2005 Bankruptcy Reform Act’s “means test” for chapter 7 bankruptcy filers was weakened by a recent ruling from a Texas bankruptcy court.  Under this ruling, student loans incurred for the purpose of obtaining a professional degree to be used in business are not “consumer debts” under section 707(b) of the bankruptcy code.  This new […]

As a general rule, student loan debt is non-dischargeable.  Bankruptcy Code Section 523(a)(8) provides that unless you can show “undue hardship” your student loans will survive your discharge.  As my colleague Craig Andresen recently wrote on this blog, the Brunner case, which is the authoritative case defining undue hardship makes it almost impossible to meet […]

When I say Brunner is vicious, stupid, and stubborn, I don’t mean Yul Brynner as Pharaoh in The Ten Commandments.  Even Ramses II cannot match this Brunner for the stubborn infliction of suffering on a multutude of innocents. I’m referring to the “Brunner Test,” often simply called Brunner.  This test is the legal standard applied in […]

Bankruptcy can help in a lot of ways.  One less well-known benefit is to free up a copy of a college transcript to use for employment or future school applications, when you can’t afford to pay the college back right now. As of 2013, Americans owe more in student loan debt than credit cards.  And […]

The winds of change may be blowing regarding student loan dischargeability in bankruptcy cases, as two recent federal appeals court cases demonstrate. Section 523(a)(8) of the bankruptcy code states that in a chapter 7 or chapter 13 case, the bankruptcy court will not discharge any student loan debt “unless excepting such debt from discharge under […]

“Her entitlement to a discharge in bankruptcy is unquestioned.” She is “destitute” according to Chief Judge Frank H. Easterbrook of the 7th Circuit Court of Appeals in a recent opinion. These are the opening statements that begin a sad story. Despite her extreme circumstances, a 53 year old woman who had not been able to […]