A Fresh Start – Discharging Student Debt: Steven Werth Co-Authors LA Lawyer Article

Over 44 million Americans owe more than $1.67 trillion in student loan debt, making it the largest consumer debt after mortgages. For debtors who possess financial woes and default on their loans, this presents long-term, dire consequences. In their LA Lawyer article, Senior Counsel Steven Frederick Werth with SulmeyerKupetz and Magdalena Reyes Bordeaux with Public Counsel examined how the three-part Brunner test is used by bankruptcy courts to determine whether such debt should be discharged.

“The Brunner test is only a useful tool if it abides by the text and purpose of the Bankruptcy Code. As this appears no longer to be the case, bankruptcy courts should not be constrained by the Brunner test nor allow ‘judicial gloss’ to supersede the statute itself,” Werth and Bordeaux wrote. “Given the new relationship of borrowing, the Brunner test appears to be outdated.”

The Brunner test applied by the courts when examining undue hardship has been criticized, and the authors suggest legislative changes to the Bankruptcy Code and revival of former hardship requirements in order for borrowers to have a fresh start. The authors also discuss recent trends in application of the Test and how certain parts of the Brunner test appear to be given a more flexible, and debtor-friendly, interpretation.

Read the LA Lawyer article here.


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