Saturday, March 1, 2014

Dischargeability of Student Loans in Bankruptcy

Bankruptcy - Educated debtor not suffering from medical condition impacting on ability to work was not entitled to discharge of student loan debt.
A Chapter 7 debtor whose household income for his family of three was more than double the federal poverty level, whose $135,115.92 in student loan debt was eligible for repayment under an income-based repayment (IBR) program under which his current monthly payment would be just $154.19 per month, an amount less than what the debtor's wife voluntarily contributed to her retirement plan, and who, while applying for various jobs in the scientific field that was his area of expertise, presented little evidence of his efforts to maximize his income by searching for work outside his chosen field, failed to satisfy even the first, or "minimal standard of living," prong of the Brunner test for obtaining an "undue hardship" discharge of his student loan debt. The first prong of the Brunner "undue hardship" test for the discharge of student loan debt, i.e., the "minimal standard of living" prong, requires more than a showing of tight finances.