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Should an undue hardship be considered 'unjust' or 'excessive?'

Thanks to the skyrocketing costs of both college and graduate school, the monthly ritual of submitting a student loan payment has become increasingly exasperating for some, fiscally painful for others and a near impossibility for far too many.

Making matters worse, those who find themselves in this last category have incredibly limited options for shedding this debt should they be pushed to the brink of insolvency due to unforeseeable events like the loss of a job, a divorce or a prolonged illness.

That's because the U.S. bankruptcy code calls for student loan borrowers looking to discharge their debt in bankruptcy to demonstrate what is known as "undue hardship," a surprisingly difficult legal standard to satisfy. In fact, statistics show that the success rate of getting student loans discharged in bankruptcy court only sits at around 56 percent.

Part of the problem, say critics, is that bankruptcy judges are presented with essentially two options when interpreting the term "undue." Specifically, they can choose to interpret it as meaning "unjust" or they can choose to interpret it as meaning "excessive," and the majority are opting for the former interpretation.

This is problematic, they argue, because this is a much more subjective and altogether tougher standard, as it will involve the judge delving deeply into the person's past conduct to determine how exactly they accrued such a large student loan debt and whether they deserve a break.

In the words of one law professor, it's a decision that includes "notions of fairness and justice that are going to be personal to the judge deciding the case."

The better and inherently more just approach, say critics, is for judges to interpret undue hardship as meaning excessive. That's because this involves a more objective and altogether simpler inquiry into the degree to which the person would be affected by requiring them to pay off their total debt.

In other words, it involves using a sort of "economic calculus" to determine whether the burden of having the person pay off the entirety of their debt would be exceedingly onerous.

It remains to be seen if bankruptcy judges become increasingly receptive to this interpretation. Early indications are that some are indeed starting to come around.

If you are struggling to keep your head above water financially, consider speaking with a skilled legal professional about your options for securing a much-needed debt relief lifeline.

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