A Potential Shift On Education Debt Discharge Standards

By Amir Shachmurove, Stephen Piepgrass, David Gettings and Timothy St. George (March 9, 2018, 12:53 PM EST) -- To its detractors, bankruptcy law's "Brunner test," which is used to establish the dischargeability (i.e., elimination) of student loan debts, stands out like a sore thumb. They claim it is a relic, yet it is controlling within the majority of federal circuits. As a matter of policy and precedent, most courts narrowly interpret the provisions barring the discharge of any student loan debts. Accordingly, in courtrooms, committees and classrooms, many deride the Brunner test as incompatible with the two animating purposes of the Bankruptcy Code in Chapter 7 (liquidation) cases: a fresh start for the debtor and equal treatment for all debts and creditors. Recently, the U.S. Department of Education may have breathed new life into these critiques — signaling there may be a policy shift with respect to the Brunner test....

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