Bankruptcy Court Discharges Student Loans, Labels “Certainty of Hopelessness” Standard a “Myth” and Not Supported by In re Brunner.

Bankruptcy Court Discharges Student Loans, Labels “Certainty of Hopelessness” Standard a “Myth” and Not Supported by In re Brunner.

Prior to filing bankruptcy, the Debtor borrowed money to pay for his undergraduate education. After graduating and serving in the United States Navy for five years, he borrowed additional funds to attend and complete law school. After graduating from law school his consolidated debt was $116,464.75. The total outstanding balance as of November 2019 was $221,385.49.

The Debtor filed a chapter 7 bankruptcy in March of 2018 and filed an adversary proceeding to have his student loan debt declared dischargeable under 11 U.S.C. § 523(a)(8). This was a contested proceeding in which the Educational Credit Management Corporation (“ECMC”) successfully intervened. The Debtor represented himself pro se. Both parties filed motions for summary judgment.

The Court first distinguished the actual Brunner test to determine dischargeability of student loans, with 32 years of subsequent cases which pinned punitive standards on Brunner that were not in the Brunner opinion. The result of the retributive dicta applied and reapplied in these cases became a quasi-standard of mythic proportions that it is impossible to discharge student loans. The Court stated clearly that it would not participate in perpetuating the myth.

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