Discharging Student Loans in Bankruptcy

In order to discharge student loans in bankruptcy, you must show the court "undue hardship". In order to establish this the many Courts have followed the Brunner test.

Based on legislative history and the decisions of other district and bankruptcy courts, the district court adopted a standard for "undue hardship" requiring a three-part showing:

(1) that the debtor cannot maintain, based on current income and expenses, a "minimal" standard of living for herself and her dependents if forced to repay the loans;

(2) that 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; and

(3) that the debtor has made good faith efforts to repay the loans.

The first part of this test has been applied frequently as the minimum necessary to establish "undue hardship." See, e.g., Bryant v. Pennsylvania Higher Educ. Assistance Agency (In re Bryant), 72 B.R. 913, 915 (Bankr.E.D.Pa.1987); North Dakota State Bd. of Higher Educ. v. Frech (In re Frech), 62 B.R. 235 (Bankr.D.Minn.1986); Marion v. Pennsylvania Higher Educ. Assistance Agency (In re Marion), 61 B.R. 815 (Bankr.W.D.Pa.1986). Requiring such a showing comports with common sense as well.


The content found on the Chang & Carlin Blog is not legal advice and is purely for informational purposes. The information contained herein is not a substitute for the advice of an attorney A blog does not create an attorney-client relationship. If you are interested in obtaining information about bankruptcy, you are encouraged to call our law firm at 866-790-8601 or visit our website at www.changandcarlin.com

Why file for Chapter 13 bankruptcy?

There are 5 major reasons why people file for Chapter 13 bankruptcy:

1. Stop a foreclosure or repossession.

2. Protect an asset that would otherwise not be protected in Chapter 7.

3. The debtor makes too much money to file for Chapter 7.

4. The debtor has been discharged in a prior Chapter 7 case and is not eligible to file again; and

5. To consolidate debts that would not be dischargeable in a Chapter 7 case.

This is a very basic outline of why one would file Chapter 13.

The content found on the Chang & Carlin Blog is not legal advice and is purely for informational purposes. The information contained herein is not a substitute for the advice of an attorney A blog does not create an attorney-client relationship. If you are interested in obtaining information about bankruptcy, you are encouraged to call our law firm at 866-790-8601 or visit our website at www.changandcarlin.com