Many people in Tennessee have student loan debt that they cannot afford to pay back. On Jan. 7, a bankruptcy judge ruled that a former law student with over $220,000 in unpaid student loan debt could have his debt discharged. The 46-year-old lawyer was a 2004 graduate of Cardozo Law School in New York, and he represented himself in court.
According to court records, the lawyer’s student loan debt was consolidated and in either forbearance or deferment for a decade. The man also made 10 payments towards the debt over 26 months. The judge who ruled in the man’s case said that the man was able to pass the Brunner test and therefore qualified for discharge of his student debt.
The Brunner test is used to determine whether a person would be able to maintain a minimal living standard if they are ordered to repay their student loans. The test also looks at whether the minimal standard of living could be maintained over the course of repayment and whether the debtor has made an honest effort to pay down the loans. The former law student’s monthly income compared to his monthly expenses was shown to be at a $1,500 deficit.
The judge, in this case, pointed out that student loans can be discharged in bankruptcy and the belief that they cannot is a myth. A lawyer may be able to look at an individual’s Chapter 7 bankruptcy case and determine whether the individual’s student loans may be discharged as part of the bankruptcy agreement. If a person’s income to expenses ratio is negative, they may have a better chance of having debts discharged.