Every month people of all ages across the country either log onto the Internet or get out their checkbooks to make yet another sizable student loan payment. While this exercise is merely groan inducing for some, it is actually painful for others, particularly those who are struggling to make ends meet.
Indeed, even those whose financial issues become so overwhelming that they seek the fresh start provided by personal bankruptcy — Chapter 7 or Chapter 13 — will often find it difficult to see their student loans discharged.
Why are student loans so difficult to discharge exactly?
In general, those borrowers looking to discharge their student loan payments in bankruptcy must be able to demonstrate “undue hardship.” While this may sound like a relatively easy legal standard to satisfy in light of the borrower’s underlying financial difficulties, this is far from the case.
How exactly must a person demonstrate undue hardship then?
The majority of U.S. Courts of Appeals — including the 11th circuit, which covers Florida — have ruled that something known as the Brunner test is to be employed in determining whether student loans can be discharged via bankruptcy.
Created back in the 1980s, the Brunner test essentially requires a borrower to demonstrate the following: 1) they will be unable to maintain even a minimal standard of living if required to continue making student loan payments, 2) their situation is unlikely to change in the foreseeable future and 3) they’ve at least made a good faith effort to repay their student loans.
Do other circuit courts apply something other than the Brunner test?
Somewhat surprisingly, the answer to this question is yes and some experts are indicating that these differing standards, which we’ll explore in our next post, may ultimately force the Supreme Court of the United States to weigh in on the matter.
If you are dealing with otherwise unmanageable levels of debt and want to learn more about your options for securing a fresh start, please consider speaking with an experienced legal professional as soon as possible.