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Discharging Student Loans in Bankruptcy

Discharging Student Loans in Bankruptcy
Many people know when they come into the office that they won’t be able to discharge their student loans. In New Jersey, in order to discharge your student loans, you have to be able to prove an “undue hardship.”

Of course, you’re thinking I have an “undue hardship” because I can’t make the payments on my loans. However, “undue hardship” is a legal term or art. In order to make your case for an “undue hardship” you have to pass what is known as the Brunner Test.

The Brunner Test is a three prong test made applicable in Third Circuit by the case of In Re Faish. Under the Brunner Test the debtor has to prove:

  1. the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for the debtor and the debtor’s dependents if forced to repay the student loans;
  2. additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and
  3. the debtor has made good faith efforts to repay the loans.

Courts tend to interpret the Brunner test very strictly. You must satisfy each of the three prongs. Each case must be evaluated by the facts of THAT case. No two cases are alike. If you believe you have an “undue hardship”, please call for a free consultation.

Contact The Law Office of Andrew B. Finberg, LLC

To set up an appointment with an experienced attorney at The Law Office of Andrew B. Finberg, LLC, we have the experience you need and the help you can afford when considering a consumer or business bankruptcy filing. Contact our office online or call us at (856) 988-9055.

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