The Brunner Test: How to Discharge Government Student Loans in Bankruptcy



The United States Bankruptcy Code says that Department of Education student loans cannot be discharged in bankruptcy unless you as the bankruptcy filer can show something called undue hardship.

In 1987 a federal appellate court in New York issued the Brunner decision which defined undue hardship. Since that time, most bankruptcy courts considering this issue have followed the reasoning of the Brunner court.

As I discuss in this video, Brunner says that to prove undue hardship you must prove that if forced to pay your student loans, you would not be able to maintain a minimal standard of living and that these financial circumstances are likely to continue indefinitely. Until recently, many bankruptcy courts have read Brunner to mean that if you can afford an efficiency apartment, and rice and beans, you are able to maintain a minimal standard of living.

However, the tide seems to be turning. Some bankruptcy judges are redefining what constitutes a minimal standard of living. Further, the Department of Education offers a variety of income based repayment plans that allow for reasonable repayment plans.

Further, there are some very good arguments that some private student financing falls outside the definition of student loans and thus may be entirely discharged in bankruptcy.

While the United States Congress appears to have little interest in aiding student loan debtors, bankruptcy judges and federal court judges appear to be more willing to address a growing public policy problem of college graduates unable to buy homes, vehicles or save for retirement.

So, if you have a significant student loan debt problem, do not assume there is no hope. #brunnertest #brunner #dischargestudentloans #studentloansbankruptcy
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7 Responses

  1. Thomas Mitchell says:

    Can this process happen after I have been discharged from bankruptcy??

  2. No Slouch says:

    how do people come up with funds to litigate? will lawyers accept payment plans? Also what is a good range for cost of litigation to try this with a bankruptcy filing?

  3. No Slouch says:

    how do people come up with funds to litigate? will lawyers accept payment plans? Also what is a good range for cost of litigation to try this with a bankruptcy filing?

  4. RK831 says:

    Is it possible to manipulate the Brunner test to discharge student debt?

  5. MARIJUANA CANNABIS says:

    WE NEED TO TALK…SOON

  6. Rome G says:

    All fictitious entities are parasites living off the people's labor and thoughts. There’s no debts, it's just a game of Monopoly to these people since the beginning. Corporations can't collect a debt, let alone sue a living being. It has to be an actual man or woman to come for with an injury/damaged property.

  7. Roddy Rod says:

    Nothing will change. Corporations own America and corporations love cheap labor. The end.

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