New York, NY asked in Bankruptcy and Tax Law for New Hampshire

Q: Looking for information on student loan insolvency

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1 Lawyer Answer
William J. Amann
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  • Bankruptcy Lawyer
  • Manchester, NH
  • Licensed in New Hampshire

A: Here's some basic information on student loans and Bankruptcy. My firm, Amann Burnett, PLLC, handles creditor and debtor side representation concerning student loans.

11 U.S.C. § 523(a)(8) excepts from discharge a student loan if requiring repayment "would impose an undue hardship on the debtor and the debtor’s dependents." The term "undue hardship" is not defined in the Bankruptcy Code. The first widely accepted case dealing the question of undue hardship in the context of a student loan discharge was the infamous case of Brunner v. New York State Higher Education Services, 831 F.2d 395 (2d Cir.1987). The so called "Brunner Test" asks three things. Each prong of the test must be met:

1. Can the debtor maintain, based on current income and expenses, a “minimal” standard of living for herself and her dependents if forced to repay the loans;

2. Are there additional circumstances indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and

3. Has the debtor has made good faith efforts to repay the loans.

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