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Are student loans discharged in bankruptcy?
Are student loans discharged in bankruptcy? Let me provide a short history of student loans in bankruptcy before answering the question. Prior to 1976, student loans were dischargeable in bankruptcy. With the passage of the new bankruptcy code in 1978 this is more difficult. From 1979 to 1998, amendments were passed that made it even more difficult to discharge student loans. The new requirements were that the Debtor exhibit between 5- 7 years of repayment before it could be discharged (law changed in 1990 to lengthen it to seven years). In 1997 the seven-year-requirement was struck down and the three-part Bruner test( http://www.moranlaw.net/student_loan_brunner.htm) became the leading case across the country for bankruptcy courts to analyze student loan cases.
The Brunner test has three-parts : 1. The Debtor cannot maintain, based on current income and expenses, a minimal standard of living if forced to pay off student loans; 2. That additional circumstances exist which make it likely that this current state of affairs will exist for a significant portion of the repayment program; and 3.This Debtor has made a good faith effort to repay the student loans.
While these elements appear to be difficult, the 4th circuit has written opinions that make it even more difficult to meet the Brunner test requirements.http://www.legalconsumer.com/bankruptcy/bankruptcy-case.php?CitationID=674 . In my opinion, if you are Debtor in South Carolina with student loan debts, it is almost impossible to obtain a discharge of your student loans. If you have a current disability which is causing your to either be unemployed or unemployed, it may be easier to seek forgiveness of the student loan debts through the following link. http://studentaid.ed.gov/PORTALSWebApp/students/english/discharges.jsp