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Assessing The Two Tests Courts Use To Determine Dischargeability Of Student Loan Debt, Sean B. King

Bankruptcy Research Library

(Excerpt)

The purpose of bankruptcy is to give honest debtors a “fresh start.” For debtors with student loans this purpose is not automatic, rather, the viability of the student loan programs takes precedence. For student loans, the default rule is they are not dischargeable in bankruptcy. Title 11 of the United States Code (the “Bankruptcy Code”) spells this out. Under section 523(a)(8) of the Bankruptcy Code, student loans must create an “undue hardship” to be discharged.

The issue is how courts determine undue hardship under section 523(a)(8). The term “undue hardship” is not defined in the Bankruptcy Code, rather, it …

Private Student Loans May Be Dischargeable In Bankruptcy Without Meeting The Undue Hardship Requirement And If Not, There Are Two Ways To Prove Undue Hardship, Kimberly Lee

Bankruptcy Research Library

(Excerpt)

Section 523 of title 11 of the United States Code (the “Bankruptcy Code”) prevents former students from discharging certain educational debts in bankruptcy, unless the failure to discharge “would impose an undue hardship on the debtor and the debtor’s dependents.” Typically, it is a debtor’s burden to show that their loans may be discharged on the grounds of “undue hardship.” However, Congress has not defined “undue hardship” leaving jurisdictions divided regarding the appropriate test. Most courts have followed the Brunner three-prong test, while only the First and Eighth Circuits use the totality of the circumstances test.

Additionally, section 523(a)(8) …

The High Burden Of A “Minimal Standard Of Living” Under The First Prong Of The Brunner Test, Samantha Alfano

Bankruptcy Research Library

(Excerpt)

Under section 523(a)(8) of title 11 of the United States Code (the “Bankruptcy Code”), student loan debt is not dischargeable unless the debtor can show “undue hardship.” Courts have concluded that section 523(a)(8) creates a presumption that student loans are nondischargeable, finding that the burden of challenging this presumption rests upon the individual debtor. The United States Court of Appeals for the Second Circuit in Brunner v. New York State Higher Educ. Servs. Corp., articulated what has become the standard test (the “Brunner test”) for determining undue hardship. Subsequently, the Brunner test has been adopted by the …

Discharging Student Loan Debt Under Brunner: Interpreting The Second Prong’S “Additional Circumstances” Requirement, Emily Gault

Bankruptcy Research Library

(Excerpt)

Under title 11 of the United States Code (the “Bankruptcy Code”), an individual debtor is not entitled to a discharge of his or her student loan debt “unless excepting such debt from discharge…would impose an undue hardship on the debtor and the debtor’s dependents.” Because the Bankruptcy Code does not define the term “undue hardship,” the courts have applied a broad range of standards which has resulted in a “state of considerable confusion.” Currently, the majority of circuit courts have adopted the test formulated by the United States Court of Appeals for the Second Circuit to determine what qualifies …

The Brunner Test Imposes A High Burden To Discharge Student Loan Debt, Lindsey Haynes

Bankruptcy Research Library

(Excerpt)

The United States Bankruptcy Code (the “Code”) makes it more difficult to discharge student loan debt than other debts. Student loans are treated differently from other loans because they are presumptively nondischargable. The government wants to ensure young debtors with promising future income streams remain liable to preserve student loan funding in the future. More specifically, section 523(a)(8) of the Code prevents abuses of the educational loan system and protects the continued viability of student loan programs. But, if certain circumstances are proven, student loan debt can be discharged.

The Code states if repayment “would impose an undue hardship …

Exempt Assets May Not Be Considered When Determining If Student Loan Should Be Discharged, Kayla Mistretta

Bankruptcy Research Library

(Excerpt)

Student loans are presumptively non-dischargeable under title 11 of the United States Code (the “Bankruptcy Code”). The Bankruptcy Code, however, provides that a debtor may rebut the presumption and be discharged from student loans if the debtor can prove that excepting the debt from discharge would cause “undue hardship” on the debtor or the debtor’s dependents. Proving undue hardship is a “formidable task” for a debtor, but not an impossible one. The Bankruptcy Code does not define undue hardship and does not provide bankruptcy courts with any guidance on how to evaluate it. Accordingly, Congress has given bankruptcy courts …

Non-Dischargeability Of Foreign Student Loans, Andrew Brown

Bankruptcy Research Library

(Excerpt)

Educational loans made, insured, or guaranteed by a governmental unit are not dischargeable in a bankruptcy case, unless the debtor obtains a hardship determination. This is true even if the loan is made, insured, or guaranteed by a foreign governmental unit. The rationale behind making it difficult to discharge student loans via the United States Bankruptcy Code (the “Code”) is to prevent abuses of the educational loan system, specifically students filing for bankruptcy shortly after graduation to discharge their loans.

Various circuit courts have adopted two tests when applying the undue hardship provision of section 532(a)(8). In 1987, the …

The Possibility Of Discharging Student Loan Debt And Assessing The Differing Standards Applied By The Courts, Maria Casamassa

Bankruptcy Research Library

(Excerpt)

Discharging student loan debt under the United States Bankruptcy Code (the “Bankruptcy Code”) is more difficult than attempting to discharge other types of debt. Although discharging student loan debt is not a simple hurdle to surpass, it is possible in certain circumstances. Under the Bankruptcy Code, student loan debt may not be discharged “unless excepting such debt from discharge . . . would impose an undue hardship on the debtor and the debtor's dependents . . . .” The Bankruptcy Code does not define undue hardship. Congress “left it up to the various Bankruptcy Courts to utilize their discretion …