After receiving a general release from his debts under Chapter 7 bankruptcy, Roger Traversa filed for release from his $60,000 student loan debt, claiming that it would be an undue hardship for him to repay. Traversa testified that it was difficult for him to obtain and hold onto employment opportunities because of issues with depression, sleep disorders, ADHD and bipolar disorder. The bankruptcy court, however, disagreed and on October 1, the U.S. Supreme Court denied his petition for hearing.
Under the Bankruptcy Code, a debtor cannot discharge student loan debt unless he or she can demonstrate that excluding that debt would impose an undue hardship. The test laid out by the 2nd U.S. Circuit Court of Appeals in the 1987 case of Brunner v. New York State Higher Education Services Corp (Brunner) has become the national standard in making that determination.
The Brunner test requires that a debtor prove by a preponderance of the evidence the following three points:
Based on current income and expenses, he or she cannot sustain a "minimal" standard of living if forced to repay the loans
Additional circumstances exist that indict his or her current state of affairs is likely to continue for a significant portion of the repayment period
He or she has made good-faith efforts to repay the loans
Nationally, student loan debt is on the rise. The average debt facing college graduates rose 5 percent to $26,600 last year. Pennsylvania's total was the second highest among the states.
If you have student loan debt, the lawyers at Harold Shepley & Associates, LLC can help you find solutions.