Student Loans in Bankruptcy: The Brunner Test

Getting student loans discharged in a Chapter 7 bankruptcy case isn't easy. You'll need to convince the bankruptcy court that you're struggling financially and that your situation is unlikely to change. Using legalese, you must show that repaying your loans would cause you "undue hardship."

Many courts use a three-factor test, called the Brunner test, to determine if you can meet the undue hardship requirement for student loan discharge. However, not all courts use this test.

Some bankruptcy courts will look at the totality of the circumstances. If the bankruptcy court uses the totality test, you'll be able to include all factors relevant to your hardship argument.

Below are the factors the bankruptcy court will consider when using the Brunner test.

The Brunner Test

The three-factor Brunner test helps the bankruptcy court determine whether you should continue paying your student loans. If doing so would cause undue hardship, the bankruptcy court will "discharge" or erase some or all of your student loan debt.

Here are the three factors the bankruptcy court will consider under the Brunner test:

• You can't maintain a minimal standard of living for yourself and your family if forced to repay your loans.
• Your current financial situation is unlikely to change during the repayment period.
• You haven't tried to get out of paying your student loans and can demonstrate you made a good-faith effort to repay them.

How to Pass the Brunner Test

To pass the Brunner test, you must successfully prove the following three things.

1. You can't provide the basics you and your family need each month, like rent, food, utilities, and car expenses. The court will review your income and expenses for verification.
2. It's doubtful that you'll ever earn more than you're making now. Unless you suffered a tragic, debilitating accident, plan to hire an expert to testify about your future career prospects.
3. You did your best to pay your student loans. Your bankruptcy attorney can help you with this, but consider creating a chart showing yearly earnings versus student loan payments or something similarly illustrative.

Likelihood of Success: Student Loan Debt Forgiveness

Most courts are reluctant to discharge student loans through bankruptcy, whether they use the Brunner test or apply other factors. However, if you are 50 or older, likely to remain poor for the rest of your life, and tried hard to pay off your loans, you might be a better candidate for student loan discharge.

Other Ways to Get Help Repaying Student Loans

Be sure to explore other ways to reduce your payments. For instance, you might extend your payments over a longer time, get a temporary break from payments called "deferment" or "forbearance," consolidate loans for a lower interest rate, or cancel loans based on other factors.

To learn about government programs for repayment, deferment, forbearance, discharge, or consolidation, check out the student loan debt articles or visit the National Consumer Law Center's Student Loan Borrower Assistance Center.

Navigating Your Bankruptcy Case

Bankruptcy is essentially a qualification process. The laws provide instructions for completing a 50- to 60-page bankruptcy petition, and because the rules apply to every case, you can't skip a step. We want to help.

Below is the bankruptcy form for this topic and other resources we think you'll enjoy. For more easy-to-understand articles, go to TheBankruptcySite.

We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.