Under Section 523(a)(8) of the Bankruptcy Code student loan debt is dischargeable if it would impose an undue hardship on the debtor and the debtor’s dependents. The Bankruptcy Code does not define “undue hardship,” but the Second Circuit, which includes the State of Connecticut, defined a three-prong test in Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395, 396 (2d Cir. 1987) for determining its existence. The debtor must prove, before the Bankruptcy Judge, by a preponderance of the evidence, the following facts, in order to discharge Federal Student Loan obligations.

Under the first prong of the Brunner test the debtor must show that he cannot maintain, based on current income and expenses, a “minimal” standard of living for herself and her dependents if forced to repay the loans; This part of the test does not require a debtor to demonstrate that repayment of the loan would cause him and his family to live at or below the poverty level. In one such case, the Court determined that the debtor failed to demonstrate inability to maintain a minimal standard of living where debtor lived a comfortable lifestyle that was above debtor’s means, such as paying for gym membership when a free gym was available at work, eating out and paying for newspapers, and did not evince efforts to minimize certain discretionary expenses. In Re Pincus.  In another case the Court denied the discharge of student loan debt where it found, “The Debtor is a healthy, thirty-two year old single male with no dependents and a long life ahead of him. Although he lives modestly, his budget leaves him with a surplus of $686 each month. His current annual gross income of $52,961 is likely to improve over the Debtor’s lifetime as he gains additional skills and experience.” In Re Longo.

Under the second prong of the test the debtor must show 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; Predicting future income is problematic and requires the court to review evidence not only of current inability to pay but also of additional, “exceptional circumstances,” suggestive of continuing inability to repay over an extended period of time. Bankruptcy Courts have recognized the following “exceptional circumstances”: (1) Serious mental or physical disability of the debtor or the debtor’s dependents which prevents employment or advancement; (2) The debtor’s obligation to care for dependents: (3) Lack of, or severely limited education; (4) Poor quality of education; (5) Lack of usable or marketable job skills; (6) Underemployment; (7) Maximized income potential in the chosen educational field, and no other more lucrative job skills; (8) Limited number of years remaining in the debtor’s work life to allow payment of the loan; (9) Age or other factors that prevent retraining or relocation as a means for payment of the loan; (10) Lack of assets, whether or not exempt, which could be used to pay the loan;(11) Potentially increasing expenses that outweigh any potential appreciation in the value of the debtor’s assets and/or likely increases in the debtor’s income; (12) Lack of better financial options elsewhere.

Under the third prong of the test the debtor must show that he has made good faith efforts to repay the loans. Good faith efforts means that a debtor has consistently made at least some payments on the student loans in the past, has sought consolidation or forbearance, has made other efforts to increase affordability of the loan payments or has offered to compromise or settle the obligation in a meaningful manner.

Private student loans generally are discharged in a Chapter 7 bankruptcy.

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