The U.S. Department Of Education has requested public comment on the factors to be considered in evaluating undue hardship claims asserted by student loan borrowers in adversary proceedings filed in bankruptcy cases.
Currently bankruptcy courts use one of two tests to analyze whether undue hardship is proven. The Brunner test, first articulated over 30 years ago, is a difficult test for bankruptcy debtors to pass. The more recent Totality Of The Circumstances test, which is considered to be more lenient, allows the court to examine any relevant facts and circumstances. Under either test the factors evaluated include: medical, work, and family history; payment history; education level; and future employment prospects.
Separate and apart from court proceedings, the Department requires student loan lenders to evaluate each undue hardship claim. If the lender agrees that repayment imposes an undue hardship it should either concede the claim by the bankrupt, or work toward a settlement.
Comments must be filed by May 22, 2018. The Department’s decision will have a significant impact on the dischargeability of student loans in bankruptcy.
The Law Offices Of Todd S. Frankenthal handles bankruptcy cases throughout South Florida, including Miami, Fort Lauderdale, West Palm Beach, Stuart, Fort Pierce, and Vero Beach.