By Kitty J. Lin, Attorney at Law
More and more people are going back to school, especially in a bad economy, so they can better themselves and further their education, in the hopes of obtaining that elusive job. In certain situations, that is most definitely true. These recent graduates have more job opportunities than before. However, not everyone achieves these dreams. They are left with hefty student loans and no job, so they have no way of repaying these debts. Unfortunately, most of the time, filing for bankruptcy will not discharge these student loans either.
The Ninth Circuit has adopted what is now commonly known as the Brunner Test, in Brunner v. New York State High Education Services Corp., 831 F.2d 395 (1987, 2nd Cir.). Under the Brunner Test, in order to discharge your student loans in bankruptcy, you need to prove:
1. That you cannot maintain, based on current income and expenses, a ‘minimal’ standard of living for yourself and your dependents if forced to repay the loans;
2. That additional circumstances exist indicating that this state of financial affairs is likely to persist for a significant portion of the repayment period of the student loans; and,
3. That you made good faith effort to repay the loans.
The hardest element to prove is the “undue hardship” test. It is not as easy as it sounds. You cannot merely prove that it is hard for you to repay your student loans. The successful cases had debtors that were never able to work again due to a physical or mental ailment. If you are able to work, chances are, you may not receive a discharge of your student loans. It is advisable that you speak with a bankruptcy attorney or bankruptcy lawyer today from West Coast Bankruptcy Attorneys for a free consultation regarding your student loans. We have offices in Redwood City, San Francisco, Oakland, and San Jose for your convenience.