Happy to announce I recently filed a lawsuit seeking to discharge my client’s student loans. “Discharge” is a legal way of saying, “cancel the loan.” It felt especially good to file the case on Mother’s Day, since my client is a single mother who’s been saddled by these for decades student loans from a private.
Student loans are notoriously difficult to discharge—too difficult, as I’ll describe a bit more below. So it’s going to be a long road ahead for both of us, but we’ve got a very strong case. I’m proud to represent her.
About student loan discharges
You’ve probably heard how difficult student loans are to difficult get out from under. They ARE hard. But it’s not impossible, and there are many things you can do with them to make them work for you. I hope to write more about some of the options in this space.
In this post, I’m talking about a student loan discharge in a bankruptcy case. In other words, if you want to pursue this route, you have to first file for bankruptcy, which is a huge life choice all by itself.
Aside from giving you a shot at discharging student loans, bankruptcy has huge benefits for many. Most of my clients with heavy student loan debt also carry other significant debt loads, like credit cards, which creates all kinds of havoc in their lives. Carrying a lot of debt around with you has huge psychological impacts. In bankruptcy, often most or all of those debts can be erased.
Bankruptcy cases don’t erase (discharge) student debts automatically, however. You have to start a process within the bankruptcy court called an adversary proceeding, which is a lawsuit in bankruptcy court. That’s what I did for my client.
In the lawsuit, I’ll be asking the court, in a trial, to issue an order that the student loans are an “undue hardship” on my client. If the judge agrees, and I think she will, then her student loans will get discharged along with her other debts.
As I mentioned, the “undue hardship” standard she has to establish, to my mind, is unnecessarily hard. And it’s crazy we need a whole trial on it.
When Congress updated bankruptcy laws a few decades ago, it did not set the bar so high.
All Congress did was say that you can’t include student loans in the bankruptcy discharge UNLESS you can prove they’re an “undue hardship.”
It doesn’t need to be so hard
The federal courts made it uniquely hard—not Congress; and they can revise their precedent if they choose to do so.
In the 1980s, back when college was highly affordable, there was a case called Brunner, which made it difficult to discharge student loans.
In that case, Mr. Brunner wanted to discharge his student loans, so the bankruptcy court cracked open the law book and noticed the words “undue hardship.”
Since they didn’t have specific guidance on how to apply those words (how would YOU know what “undue hardship” means?), the judges in Brunner created a standard called a test. I won’t bore you with the details here, but it’s an unnecessarily hard test to pass. I believe my client in this case easily meets it, but the vast majority do not.
It’s time to rethink Brunner. Times have changed dramatically since the time the Brunner test was created. Student loans are now a crushing part of too many people’s lives, and we’re starting to see that they’re having deleterious effects on people’s ability to thrive financially, and even emotionally.
Accordingly, we’re starting to see more and more courts soften the hardest edges of Brunner—even returning to the original language of the statute in some cases, which simply says, “undue hardship.” We need this judicial trend to continue.
I’m beyond excited to get to trial and represent my client in this matter.