Maine Bankruptcy and Debt Relief Blog

"Undue Hardship" Remains Difficult to Prove Regarding Student Loans

Posted on 04/26/2006 at 12:00 am by Molleur Law Offices
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Nash v. Connecticut Student Loan Foundation. The First Circuit issued its first decision on the proper standard for determining "undue hardship" of student loans. The Court was given the opportunity to decide whether to employ the test used by the Second Circuit in the Brunner decision, or to use the "totality of the circumstances" test, which lower courts in the First Circuit has relied upon. The Bankruptcy Court also considered a "good faith" component in its decision.

The First Circuit declined to consider "good faith" repayments efforts by the debtor as an important factor in looking at an undue hardship request. Instead, the First Circuit affirmed the lower courts' decision denying the undue hardship discharge on the basis that insufficient evidence was presented demonstrating that the debtor suffered from a long term disability which made her unable to work for the foreseeable future. The First Circuit suggested that evidence from a doctor and perhaps a vocational expert might demonstrate the long term disability (with an expectation that the debtor should have those individuals testify at trial). This presents a very imposing burden upon the debtor, since testimony from experts like those is expensive. The essence of this decision is that it clarifies the standard a debtor must meet to show "undue hardship", but it also shows how difficult it is to prove student loans should be discharged.