The Connecticut Bankruptcy Courts looks to the case of Brunner v. New
York State High Education Services Corp. Brunner is a decision from 1987
by the 2nd Circuit Court of Appeals in New York. The citation is 831
F.2d 395.
In simple terms, a debtor must prove that the student loans cause an
“undue hardship.”
There is a three part test to determine if there is an undue hardship.
- The debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for herself and her dependents if forced to repay the loans
- That additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans and (two requirements)
- The debtor has made good faith efforts to repay the loans (emphasis added)
A debtor must satisfy all three parts of the test to get a discharge.
In many cases, the first part of the test is relatively easy to satisfy.
There are many situations in which debtors simply do not have any extra
money to pay off a student loan.
With regard to part 3 of the test, unfortunately , a debtor may have had
many student loan deferments. In these cases , a court is likely to find
that there was no good faith effort to repay.
In my view, Part 2 of the test is the most difficult to satisfy. The key
point is there must be “additional” circumstances and the circumstance
is likely to persist for a “significant” portion of the repayment period.
I have seen rare but unique situations which satisfy both requirements
of this rule. The additional situation typically involves health issues.
The health issues are long term problems which prevent a person from
working, and thereby paying back a loan or loans.
The circumstances must be likely to persist for a “significant” portion
of the repayment period. Therefore, a temporary problem would not
satisfy this rule. An argument that a person is unemployed or under-
employed should be insufficient, as an employment situation can change
at any time.
Attorney Robert M. Singer
Law Offices of Robert M. Singer, LLC
2572 Whitney Avenue
Hamden, CT 06518
203-248-8278