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Brunner v. New York State Higher Educ. Serv

United States Court of Appeals, Second Circuit
Oct 14, 1987
831 F.2d 395 (2d Cir. 1987)

Summary

holding that undue hardship standard requires debtor to show, inter alia, that he cannot maintain a "minimal" standard of living for himself and his dependents if forced to repay the loans

Summary of this case from In re Rice

Opinion

No. 41, Docket 87-5013.

Argued September 22, 1987.

Decided October 14, 1987.

Marie Brunner, pro se.

Frederick J. Schreyer, Albany, N.Y., for appellee.

Appeal from the United States District Court for the Southern District of New York.

Before LUMBARD, OAKES and KEARSE, Circuit Judges.


Marie Brunner, pro se, appeals from a decision of the United States District Court for the Southern District of New York, Charles S. Haight, Judge, which held that it was error for the bankruptcy court to discharge her student loans based on "undue hardship," 46 B.R. 752 (Bankr.D.C.N.Y. 1985). We affirm.

While this court is obliged to accept the bankruptcy court's undisturbed findings of fact unless they are clearly erroneous, it is not required to accept its conclusions as to the legal effect of those findings. Montco, Inc. v. Glatzer (In re Emergency Beacon Corp.), 665 F.2d 36, 40 (2d Cir. 1981) (citing Queens Blvd. Wine Liquor Corp. v. Blum, 503 F.2d 202 (2d Cir. 1974); R.Bankr.P. 810 (current version, see R.Bankr.P. 8013); Bank of Pa. v. Adlman, 541 F.2d 999, 1005 (2d Cir. 1976)). whether not discharging Brunner's student loans would impose on her "undue hardship" under 11 U.S.C. § 523(a)(8)(B) requires a conclusion regarding the legal effect of the bankruptcy court's findings as to her circumstances. Therefore, the bankruptcy court's conclusion of "undue hardship" properly was reviewed by the district court.

As noted by the district court, there is very little appellate authority on the definition of "undue hardship" in the context of 11 U.S.C. § 523(a)(8)(B). Based on legislative history and the decisions of other district and bankruptcy courts, the district court adopted a standard for "undue hardship" requiring a three-part showing: (1) that the debtor cannot maintain, based on current income and expenses, a "minimal" standard of living for herself and her dependents if forced to repay the loans; (2) that 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) that the debtor has made good faith efforts to repay the loans. For the reasons set forth in the district court's order, we adopt this analysis. The first part of this test has been applied frequently as the minimum necessary to establish "undue hardship." See, e.g., Bryant v. Pennsylvania Higher Educ. Assistance Agency (In re Bryant), 72 B.R. 913, 915 (Bankr.E.D.Pa. 1987); North Dakota State Bd. of Higher Educ. v. Frech (In re Frech), 62 B.R. 235 (Bankr.D.Minn. 1986); Marion v. Pennsylvania Higher Educ. Assistance Agency (In re Marion), 61 B.R. 815 (Bankr.W.D.Pa. 1986). Requiring such a showing comports with common sense as well.

The further showing required by part two of the test is also reasonable in light of the clear congressional intent exhibited in section 523(a)(8) to make the discharge of student loans more difficult than that of other nonexcepted debt. Predicting future income is, as the district court noted, problematic. Requiring evidence not only of current inability to pay but also of additional, exceptional circumstances, strongly suggestive of continuing inability to repay over an extended period of time, more reliably guarantees that the hardship presented is "undue."

Under the test proposed by the district court, Brunner has not established her eligibility for a discharge of her student loans based on "undue hardship." The record demonstrates no "additional circumstances" indicating a likelihood that her current inability to find any work will extend for a significant portion of the loan repayment period. She is not disabled, nor elderly, and she has — so far as the record discloses — no dependents. No evidence was presented indicating a total foreclosure of job prospects in her area of training. In fact, at the time of the hearing, only ten months had elapsed since Brunner's graduation from her Master's program. Finally, as noted by the district court, Brunner filed for the discharge within a month of the date the first payment of her loans came due. Moreover, she did so without first requesting a deferment of payment, a less drastic remedy available to those unable to pay because of prolonged unemployment. Such conduct does not evidence a good faith attempt to repay her student loans.

It is true, however, that considerable time has elapsed since the original filing of Chapter 7 proceedings, and even since the hearing before the bankruptcy judge. We note that Judge Haight's order was without prejudice to Brunner's seeking relief pursuant to R.Bankr.P. 4007(a), (b).

Judgment affirmed.


Summaries of

Brunner v. New York State Higher Educ. Serv

United States Court of Appeals, Second Circuit
Oct 14, 1987
831 F.2d 395 (2d Cir. 1987)

holding that undue hardship standard requires debtor to show, inter alia, that he cannot maintain a "minimal" standard of living for himself and his dependents if forced to repay the loans

Summary of this case from In re Rice

holding that one of the reasons good faith was lacking was because the debtor had filed for discharge within a month of the date the first payment of her loans came due

Summary of this case from Munch v. Educ. Credit Mgmt. Corp.

holding that even the lower undue hardship standard requires the debtor to show that he cannot maintain a "minimal" standard of living if forced to repay the loans

Summary of this case from In re Simone

finding bad faith in part because debtor filed for discharge one month after first payment date

Summary of this case from Hedlund v. Educ. Res. Inst. Inc.

finding no good faith effort where debtor filed for discharge within one month of the date the first payment came due on her loans

Summary of this case from In re Spence

finding that debtor lacked good faith in attempting to discharge debt where she failed to seek a deferment of her loan

Summary of this case from In re Cheesman

finding no "additional circumstance" exist where debtor "is not disabled, nor elderly"

Summary of this case from Educational Credit Management Corp. v. Degroot

finding among other factors that the debtor lacked good faith because she made no attempt to request a deferred payment on her loan

Summary of this case from Jackson v. Educational Credit Mgmt. Corp.

finding that the debtor, a Master's degree holder, showed no evidence of "a total foreclosure of job prospects in her area of training"

Summary of this case from In re Mallinckrodt

finding that the debtor, a Master's degree holder, showed no evidence of"a total foreclosure of job prospects in her area of training"

Summary of this case from In re Mallinckrodt

finding that the debtor lacked good faith in attempting to discharge debt because she had failed to seek a deferment on her loan

Summary of this case from In re Wallace

finding no evidence to indicate "a total foreclosure of job prospects in [the debtor's] area of training."

Summary of this case from Gesinde v. U.S. Dep't of Educ. (In re Gesinde)

finding lack of good faith because Debtor failed to seek a deferment

Summary of this case from Hill v. Educ. Credit Mgmt. Corp. (In re Hill)

finding no "additional circumstance" exist where debtor "is not disabled, nor elderly"

Summary of this case from In re Hamilton

finding that the debtor lacked good faith in attempting to discharge debt because she had failed to seek a deferment of her loan

Summary of this case from In re Burton

finding that the debtor lacked good faith in attempting to discharge debt because she had failed to seek a deferment of her loan

Summary of this case from In re Thompson

finding among other factors that the debtor lacked good faith because she made no attempt to request a deferment payment on her loan

Summary of this case from In re Stupka

finding student loan nondischargeable where "[t]he record demonstrat[ed] no `additional circumstances' indicating a likelihood that [the debtor's] . . . inability to find any work [would] extend for a significant portion of the loan repayment period" in a case where debtor was not disabled or elderly

Summary of this case from In re Cobb

finding student loan nondischargeable where "[t]he record demonstrat[ed] no `additional circumstances' indicating a likelihood that [the debtor's] inability to find any work [would] extend for a significant portion of the loan repayment period" in a case where debtor had no dependents and was not disabled or elderly

Summary of this case from In re McLeod

finding student loan nondischargeable where "[t]he record demonstrat[ed] no `additional circumstances' indicating a likelihood that [the debtor's] current inability to find any work will extend for a significant portion of the loan repayment period" in a case where debtor had no dependents and was not disabled or elderly

Summary of this case from In re Phillips

finding that debtor lacked good faith in attempting to discharge debt where she failed to seek a deferment on loan

Summary of this case from In re Phillips

determining what constitutes "undue hardship" under 11 U.S.C. Section 523(B) "requires a conclusion regarding the legal effect of the bankruptcy court's findings as to [debtor's] circumstances"

Summary of this case from In re Rice

adopting district court test

Summary of this case from Nary v. Complete Source (In re Nary)

adopting the district court's so-called Brunner test, a three-pronged evidentiary tool

Summary of this case from In re Dufresne

adopting the District Court's test in 46 B.R. 752, now known as the " Brunner test"

Summary of this case from In re Hicks
Case details for

Brunner v. New York State Higher Educ. Serv

Case Details

Full title:MARIE BRUNNER, APPELLANT, v. NEW YORK HIGHER EDUCATION SERVICES CORP.…

Court:United States Court of Appeals, Second Circuit

Date published: Oct 14, 1987

Citations

831 F.2d 395 (2d Cir. 1987)

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The bankruptcy court discharged Frushour's student-loan debt because it held that she proved an "undue…

Gesinde v. U.S. Dep't of Educ. (In re Gesinde)

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