STUDENT LOAN BANKRUPTCY
What is the Brunner test?
Public and private alike, student loan debt is typically not dischargeable in bankruptcy without showing undue hardship under the applicable test used in the specific court and established either by a Federal District Court or a Court of Appeals of the appropriate Circuit Court. Most courts have previously used a strictly-applied, slightly modified, test known as the Brunner test. The test is extremely hard to meet and, in most cases, debtors can find easier and better student loan debt relief assistance via a Department of Education program or other available administrative review.
“Brunner now provides the definitive, exclusive authority that bankruptcy courts must utilize to determine whether the “undue hardship” exception applies. Student-loan debtors have the burden of establishing each element of the Brunner test. All three elements must be satisfied individually before a discharge can be granted. If one of the requirements of the Brunner test is not met, the bankruptcy court’s inquiry must end there, with a finding of no dischargeability. . Equitable concerns or other extraneous factors not contemplated by the Brunner framework may not be imported into the court’s analysis to support a finding of dischargeability. “ In re Faish, 72 F.3d 298, 306 (3d Cir. 1995).
Brunner test is a three part test consisting of:
-Whether Debtor can/cannot maintain, based on current income and expenses, a minimal standard of living for the debtor and dependents if forced to pay off student loans.
– Whether additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans.
– Whether Debtor has made good-faith efforts to repay the loans.
Although courts tend to interpret the Brunner test strictly, whether you qualify for a hardship discharge will ultimately be a function of the individual facts and circumstances of your case as well as the attitudes toward student loan debt that are prevalent in your jurisdiction. Last year, for example, less than 10 cases of student loans were filed in the Eastern District of Pennsylvania, which covers Philadelphia, Bucks and other surrounding counties. None of the above cases were able to meet the requirements of the Brunner test and none of the Debtors received a much anticipated discharge, despite quite extreme hardships present in a few of the above cases.
Previously, judges tried (and failed) to push the discharge through the system. In re Price, 573 B.R. 579, 612 (Bankr. E.D. Pa. 2017), rev’d sub nom. DeVos v. Price, 583 B.R. 850 (E.D. Pa. 2018), the most recent student loans case from the Eastern District of Pennsylvania, Judge Frank of the bankruptcy court, held that a mother of two with a modest income and little, if any, career prospects, should be allowed to discharge her burdensome student loans
The above decision was immediately appealed to the District Court for the Eastern District of Pennsylvania and in the end struck down the decision. The debtor was not successful in her attempt to discharge the student loans under the circumstances.
Student Loan Debt Relief Options
Bottom Line: Student Loan Debt is Nearly Impossible to Discharge
When it comes to student loan debt, the bottom line is this: for most people bankruptcy discharge of student loans will not work out. However, under a proper factual pasture, it is possible to get through and discharge the loan, if all “chips fall into their places.”
If you are struggling with student loan debt or other debt, you should reach out to an experienced bankruptcy attorney to see how they can help. Litvak Legal Group can help you to break the glass ceiling to obtain a much needed financial freedom you deserve.