The “Undue Hardship” Test for a Student Loan to be Dischargeable in Bankruptcy

The Bankruptcy Code allows student loan to be discharged if preventing the discharge would impose an “undue hardship” on the borrower or the borrower’s dependents. Although this is often an extremely difficult standard to meet, it is important to understand what the court will consider in your case.
In California, courts apply what is called the “Brunner Test” to determine whether undue hardship exists. To receive a discharge for student loans, the borrower must meet the following three requirements:

1) That the borrower cannot repay the student loan and maintain a minimal standard of living. Here, the court will compare the borrower’s income to that of the published poverty line for a family/household of similar size.

2) That the borrower’s situation is likely to persist for a significant portion of the repayment period of the student loans. This usually requires a showing of exceptional circumstances that will continue to prevent the borrower from repaying the loan for most of the repayment term. Typically, the court requires strong evidence of such circumstances, such as severe health problems or disability. An inability to work in one’s chosen profession is not sufficient.


3) That the borrower has made good faith efforts to attempt to repay the loans. This typically requires a showing that the borrower has consistently made attempts to repay the debt. The court may also examine whether the borrower has already tried deferring the loans or using forbearance.
If you think you have met the above listed three requirements and would like to find out if your case indeed meets the “undue hardship” test, contact our office to find out.

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