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“It is very difficult, although not completely impossible, for borrowers to discharge student loans in bankruptcy,” wrote student loan attorney Adam S. Minsky forForbes. “The federal bankruptcy code treats student loans differently from other types of consumer debt (such as credit card debt or medical debt). In order to discharge their student loans in bankruptcy, student loan borrowers must prove that they have an ‘undue hardship’ that would prevent them from repaying their student loans.”
Rosenberg had been accumulating the debt since he first began borrowing money in 1993 to pay for his history degree from the University of Arizona. After a five-year stint in the U.S. Navy, he went back to school at Cardozo Law School at Yeshiva University, applying for and receiving more student loans to cover his tuition and board.
The judge’s decision to discharge Rosenberg’s debt hinged on what’s known as the Brunner test, named after a 1987 Second Circuit case that has since become something of a standard in similar student debt cases, according to theFederation of American Scientists.
In that specific case, the court found that the debtor was unable to maintain, based on her current income, a “minimal standard of living for herself if forced to repay the loans,” but had made “good faith efforts” to do so, according to the document.
Those requirements became the three prongs of the so-called Brunner test: can the petitioner maintain a minimal standard of living, do any additional circumstances exist that indicate the financial situation will stay the same during the repayment period, and have they made good faith efforts to pay off the loans?
According to Minsky, student loan borrowers who want the same outcome as Rosenberg have to file an “adversary proceeding” in bankruptcy court as part of their case, which “involves suing your student loan lenders, who will fight tooth and nail to try to convince a judge that the borrower does not meet the legal standard for a discharge.”
The fight is reportedly set to continue for Rosenberg, as his student loan lenders have said they will appeal the decision to a higher court, according toForbes.
The case is indicative of a larger problem within the United States, where some44 million people owenearly $1.5 trillion in student loans.
source: people.com
