Plaintiff filed an adversary against Defendant, a Chapter 7 Debtor, seeking a determination that Defendant’s student loan was nondischargeable under 11 U.S.C. § 523(a)(8). Plaintiff agreed to make loans to Defendant to refinance her two qualified educational loans. The agreement also allowed Plaintiff to declare the entire loan due immediately upon default. The Court found Defendant failed to show an undue hardship under the Brunner test. While Defendant could not maintain a minimal standard of living under the loan’s current repayment plans, Defendant lacked “exceptional circumstances” making it improbable she could ever repay the loan. Specifically, Defendant’s current full-time employment and continued employability weighed against a full discharge. The expense of caring for her adult daughter would decrease if her daughter contributed to household expenses or lived independently. However, the Court granted a partial discharge because under the current loan terms, Defendant could neither pay the balance in full nor afford the monthly payments. Instead, the Court ordered repayment based on the federal loan repayment plans. Defendant’s monthly payment would be recalculated each year based on income, tax status, and family size and any unpaid debt would be discharged after twenty years.
11 U.S.C. § 523(a)(8) -- Nondischargeability - Student Loans