The Worst Kind of Debt You Can Have: Student Loans (Part Three)

05 Feb The Worst Kind of Debt You Can Have: Student Loans (Part Three)

In parts one and two, I discussed how (1) the definition of student loans is extremely broad, and (2) the history of how student loans have been come increasingly difficult to discharge. In this post, I’ll address the predominant legal standard used by almost all bankruptcy courts to determine whether a debtor’s circumstances create an “undue hardship.”

The Brunner Test

In Brunner v. New York Higher Educ. Services, 831 F.2d 395 (2d Cir. 1987), the Second Circuit Court of Appeals held that undue hardship exists if:

(1) The debtor can’t maintain, based on current income and expenses, a “minimal” standard of living if he repaid the student loans;

(2) Other circumstances exist indicating that the debtor’s financial condition is likely to persist for a large portion of the student loan repayment period; and

(3) The debtor has made a good faith effort to repay the student loans.

Actual decisions applying the Brunner test are varied, but at least one Circuit Court of Appeals has specifically held that a debtor need not be at poverty level to demonstrate that he was entitled to a discharge. In re Hornsby, 144 F.3d 433 (6th Cir. 1998).

When reviewing these cases, it’s clear that the outcome of each case is dependent on (1) the views of the particular judge assigned to your case—any judge has his biases or leanings, and (2) the unique facts of each case. Individual circumstances, especially disabilities or misfortunes, weigh heavily in the court’s consideration. Whether or not you qualify for a student loan discharge is highly dependent on what bankruptcy judge has been assigned to your case, as well where you live. Different circuit courts of appeal cover different states, and they have all decided student loan cases and added their own interpretation of the various factors involved in these cases. So, for example, your case might come out differently if you live in Maryland instead of California. You should seek experienced local bankruptcy counsel for assistance in deciding whether to ask for your student loans to be discharged.

You must file an adversary proceeding to ask for your student loans to be discharged

To request a discharge of student loans, you must bring an “adversary proceeding.” An adversary proceeding is a separate lawsuit in your underlying bankruptcy case. You sue the student loan creditor just like you would in any other lawsuit. The adversary proceeding may be brought at any time, even after your bankruptcy case is closed.

In “The Worst Kind of Debt You Can Have: Student Loans (Part Four)” I’ll address some other strategies for dealing with student loans.

Russell A. DeMott is a Charleston, South Carolina Bankruptcy Lawyer who helps people file Chapter 7 and Chapter 13 Bankruptcy.

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Russell A. DeMott is a Charleston, South Carolina bankruptcy lawyer who represents consumer debtors in Chapter 7 and Chapter 13 bankruptcy. He is the author of the Charleston Bankruptcy Blog. He is also a member of the South Carolina Bankruptcy Blog. He files bankruptcy cases for clients in the Charleston, South Carolina division, which runs from Myrtle Beach to Beaufort. The DeMott Law Firm also represents clients in foreclosure defense and mortgage modification. You can also connect with Russ on Google Plus Russell DeMott. Russ can be contacted directly at (843) 695-0830 or by email at

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