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X-No-archive: yes
Hello,
I know that student loans are no longer discharged under bankruptcy,
unless one can prove them to be an undue hardship. I have two student
loans, one federal and one private. I am currently in an Economic
Hardship Deferment with my federal loan. The monthly payments on these
loans total $460. My monthly income is between $400 and $500. If I end
up having to file bankruptcy (which I really don't want to do), what
are my chances in having these loans discharged? I'm in West Virginia.
The federal loan has been in repayment for six years; the private
educational loan has been in repayment for nearly nine.
Thanking you in advance for any advice you're able to offer,
Isabella
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Isabella:
The answer varies depending on which state you live in and the decisions of
the bankruptcy and appellate courts of that state.
The principal case discussing student loan hardship discharges, which has
been adopted in a number of states, is Brunner v. NY Higher Education
Services Corp., 831 F.2d 395 (1987).
For specific cases dealing with the particular facts and circumstances
persuading and dissuading courts concerning the undue hardship test, as a
starting point, I would suggest the article written by Jennifer L. Frattini
found at 17 Bank. Dev. J. 537 - Emory University School of Law's Bankruptcy
Development Journal - Spring 2001 entitled "The Dischargeability of Student
Loans: An Undue Burden?"
The author discusses and cites many cases concerning student loan undue
hardship dischargeability. Another article worth reading is entitled
"Playing the Get Out of College Free' Card: Dischargeability of Educational
Debts in Chapter 7 Bankruptcy" written by Julie J. Heimark and published in
1997 by Pepperdine Law School's Law Review at 25 Pepp. L. Rev. 531.
The challenge is that courts have applied and weighed various factors (e.g.
living with parents, if debtor permanently or temporarily disabled, living
in mobile home with wife and kids, etc.) differently and sometimes
subjectively.
The court in In Re Brown 227 B.R. 540 (Bkrtcy. S.D. Cal. 1998) held that the
debtor satisfied the Brunner test and was able to discharge his law school
student loan. The court discusses in great detail the debtors' income,
expenses, living conditions and other factors that persuaded the court in
its findings.
Are you permanently or temporarily disabled? That's a factor that has been
heavily weighed in favor of discharge.
--
Brett
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