When you file bankruptcy, and owe school loans, you have to file a separate lawsuit during the bankruptcy court and prove who\’s would be an “undue hardship” so that you can have to repay your student loans.
The Los angeles Times writes about the Brunner test for undue hardship.
Which should be tossed out like last year’s garbage.
The debtor inside the Brunner bankruptcy case was only 12 month out of school, with a master’s degree, when she filed bankruptcy in 1987.
Even though she lost her undue hardship case, student loan debt was dischargeable under the bankruptcy code then, if your bankruptcy case was filed much more than 5? years after the first repayment was due.
So, Ms. Brunner could wait the then, 6 years, to file for Chapter 7 again, and get those student education loans discharged.
Then Congress made it 7 years instead of 5, then they added bankruptcy schedules I and J, showing monthly income and expenses.? Ps3 slim give bankruptcy judges the electricity to dismiss Chapter 7 cases which constituted an abuse.
Then, Congress added the means test, according to your income for the six months when you filed, with a bright line income test to just make more bankruptcy judges to dismiss Chapter 7 cases.
Also in 2005, they added private student education loans to the undue hardship pile.? Previously, private education loan debt was still dischargeable.
So, since 1987, education loan debt has skyrocketed, per? Kitty Bennett and Alain Delaqurire in the N. Y. Times:
Among debtors filing for bankruptcy with student loans, the average measure of student debt has doubled to just about $31,000 in 2014 from $15,350 in 2005, based on an analysis by Professor Austin of Northeastern. But perhaps a bigger factor, student loans as a percentage of the filer\’s annual gross income have also increased substantially. In 2014, 16 percent of the bankruptcy filers had student loans that totaled in excess of 50 percent of their annual income, compared to 5.4 percent in 2005.
And, Congress has added it\’s unlikely that any, but two, income tests for filing Chapter 7 bankruptcy bankruptcy.
Which, to my thought processes, satisfies the prong of the Brunner test with regards to minimal living standards for that debtor.
That is, passing the means test, as well as I and J budget analysis, means, you are unable to afford the student loan repayments.
There are the good faith test, showing for you to did/tried to repay the loans, and, that your chosen circumstances are not likely to change in your favor.
Of course, I still advocate actually changing the statute.
But I believe all that Congress has done since Brunner was decided in 1987, and the huge factual difference between that debtor and today’s education loan debtors, mean that Brunner has already been overridden.
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