Student loan debt, now totaling nearly $2 trillion, is an increasing concern. In his article for Law360, Senior Counsel Steven F Werth explains the test that most bankruptcy courts use to determine whether such debt can be discharged—the Brunner test.
Time has made clear that the three-part Brunner test is here to stay, at least until the Bankruptcy Code is amended. Its test is not only comprehensive, but is helpful in identifying facts fatal—or helpful—to obtaining a discharge. Can a debtor make loan payments today? Might the debtor be able to make loan payments tomorrow? Did the debtor show good faith in making payment in the past? All three factors must be in favor of discharge for it to occur.
All debtors will have a sympathetic story to tell. For student loan debt, the Brunner test is the language that debtors must use to tell that story. It is also the tool courts use for finding deviations in that story. A review of recent Brunner test decisions illustrates how that process works—often with stark results.
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