Student loans are one of the most important financial issues of the day, and as discussed in this post, are hard to discharge in Bankruptcy. The test of “undue hardship” is definitely a high bar, and depends on the specific facts of the case. Because of this, we will occasionally discuss cases in which Courts find that student loans are, or are not, dischargeable in a Bankruptcy case. In the first summary from Georgia, the Debtor’s take-home pay was $1,542 per month from her job as a municipal bus driver. She is financially responsible for her adult child, who apparently has severe emotional disorders. Her son receives social security, including a lump sum for back payments, but Debtor is required to spend the money only for the benefit of her son. In addition, in 2010, Debtor was diagnosed with an eye disorder, with a growth in her eye that could not be removed until it matured in 2011. There is some question about her ability to retain her certification as a bus driver based upon her impaired vision. After payment of her basic expenses, she had $53 a month left over.
It certainly seems that the debtor in this case had some hardships in her life, but do they meet the test of “undue hardship” and the Brunner Test? The Court said no. Although she only had enough income to meet a minimal standard of living, and may lose her job as a bus driver because of her vision, she may be able to get another job. In addition, her son would be moving to a facility for his care, and a little more income would be freed up for her needs. Therefore, she did not demonstrate a “certainty of hopelessness” required for a discharge of her student loans. More detail about this case can be found in this article.
Importantly, the Court found that the debtor had acted in good faith, and the opinion indicates that she was probably very close to meeting the discharge standard. If you have overwhelming student loan obligations, and financial difficulties, it can only help to meet with a Bankruptcy lawyer or two to discuss your situation. Some studies show that more people may be eligible for student loan discharge if they simply sought a discharge. If you are in Georgia, contact us or another good lawyer.