The basic idea behind bankruptcy is that once you complete the process, you can enjoy a fresh financial start. This means that your debts are essentially wiped away, and you maintain some assets that you can use to move forward financially. While most people assume that bankruptcy covers all types of debts, that is not always the case. One type of debt, in particular, has historically proven to be difficult to discharge with bankruptcy: student loan debt. You can get your student loans discharged only if you can prove to a court that repaying those loans would cause undue hardship. But exactly what is undue hardship in bankruptcy?
What Is Undue Hardship in Bankruptcy?
Student loans are treated differently than most types of debt under bankruptcy rules. This makes the question of what qualifies as undue hardship more difficult to answer. Unfortunately, when bankruptcy regulations were written by the federal government, lawmakers didn’t clarify what the term “undue hardship” meant, so the courts needed to enforce a provision of the law that was undefined. Various courts have since come up with ways to define this term.
The most common solution to this problem is to apply the Brunner Test to determine whether repaying loans would be an undue hardship. This is a test defined by the court in Brunner v. New York State Higher Education Services. It is a strict test that is difficult for petitioners to pass.
Other courts use a less rigorous “totality of circumstances” test. In 2022, the Department of Education and the Justice Department worked jointly to define whether a borrower meets the undue hardship definition. Under this agreement, borrowers submit evidence to the government after filing bankruptcy. If the government accepts that repaying the loans would amount to an undue hardship, the Justice Department does not oppose the discharge in court.
Building Your Case for Undue Hardship
Regardless of how you try to make a case for undue hardship, there are two steps you want to take to build your case. First, you should preserve as many records as possible. The more evidence you can produce, the better you can define your financial situation for the government body that is determining whether you qualify.
The second thing you should do is consult with my law firm as soon as possible. I have years of experience handling student loan situations.
If you are looking to get student loans discharged through bankruptcy in Florida, my law firm can advise you on your situation. Contact me at (407) 749-0080 to schedule a consultation right away.
Strategies for Proving Each Element of the Brunner Test
The Brunner Test has three elements. You will need to prove that you meet all three elements to pass the test to avoid a denial of your discharge petition student loans.
You Can’t Maintain a Minimal Standard of Living if Forced to Repay the Loans
This element is the easiest to prove if you maintain good records of your finances — both income and expenses. If you can provide evidence of how much money you make each month and how much you spend on average, it is relatively simple for authorities to determine whether student loan payments would put you in the red.
Your Financial Situation Is Unlikely to Meaningfully Change While Repaying Your Loans
Most people earn more money later in their careers. But that increase in income is meaningful only if it significantly surpasses inflation. This element can be tricky to prove because you are trying to predict future events.
You Have Made a Good-Faith Effort to Repay Your Loans
This is often the trickiest part of the test to prove. When finances get tight, student loan repayments are often one of the first bills that get ignored or skipped. This is because missing other payments has immediate consequences, like having your car repossessed or lights turned off. On the other hand, your diploma won’t be stripped if you miss a student loan.
Unfortunately, missed payments may make it difficult to prove you made a good-faith effort to repay your loans. You should pay as much toward your loans as possible, even if you can’t pay them all. Doing so can go a long way toward satisfying this element. One especially important method of proof, for federal student loans, is to have a history of least trying to participate in income driven repayment options.
Overcoming Common Challenges
Perhaps the biggest challenge to navigating tests like these is that the rules for discharging student loans change with each new administration. My law firm can help you avoid this problem by making the process proceed as efficiently as possible and ensuring you stay updated on any changes that can affect your case.
Alternative Options to Consider
If student loan discharge isn’t an option, you may want to consider income driven repayment or forgiveness options. The federal government offers several ways to get student loan payments reduced or forgiven. Some involve long-term payment plans, while others can result in loans being forgiven within a relatively short time.
Consult With a Seasoned Florida Bankruptcy Lawyer Today
Bankruptcy laws are complicated, which means many people don’t take advantage of them when it can be beneficial to do so, especially when it comes to student loan debt. If you are considering using bankruptcy to discharge your student loan debts in Florida, my law firm may be able to help make the process work for you.
Considering bankruptcy in Florida? Contact my law firm at (407) 749-0080 as soon as possible to discuss your case with an experienced bankruptcy lawyer.
Attorney Lewis Roberts
The weight of debts that one cannot pay carries financial stress into every waking moment. It is time for this to end. Lewis Roberts, PA, offers solutions to relieve these worries. With over 20 years of experience in helping individuals overcome the burden of debt, bankruptcy attorney Lewis Roberts presents a range of options tailored to each unique situation. Clients can trust his advice on any matter related to debts, as he identifies appropriate options and explains the paths to debt relief clearly and carefully. This ensures that clients make the best decisions for their future. [ Attorney Bio ]
