Education loan Discharge: Reevaluating Undue Hardship under a Presumption of Consistent Usage
Ashley M. Bykerk * Notes & Comments Editor, Emory Bankruptcy Developments Journal; J.D. Candidate, Emory University School of Law (2019); B.A., with a high difference, Nebraska Wesleyan University (2016). First, i’d like to thank my faculty consultant, Professor Rafael Pardo, for their assistance that is invaluable in my remark. I might additionally prefer to thank the employees users and editors of this Emory Bankruptcy Developments Journal for his or her diligent operate in planning my Comment for publication. Finally, I wish to thank my children and buddies for his or her endless help.
An number that is increasing of suffer from economic stress due to academic financial obligation. Several of those people look for respite from that stress through the bankruptcy system, where they need to establish that repaying their academic financial obligation would impose an undue difficulty in purchase to acquire a release of these financial obligation. The main focus for this Comment is § 523(a)(8) associated with U.S. Bankruptcy Code, which sets forth academic financial obligation as an exclusion to bankruptcy release unless the payment of education loan responsibilities imposes an “undue difficulty. ” In drafting this area, Congress failed to determine the expression “undue hardship, ” thus empowering the courts to find out just just what comprises undue difficulty and the circumstances that deserve forgiveness of academic debt. Being outcome, courts allow us a number of tests to deliver a framework for determining whether a financial obligation should really be dischargeable.
Congress’s choice to concern the relief of academic loans in the application of the obscure and standard that is indeterminate proved to be burdensome for various reasons. One solution, maybe not yet talked about by courts and commentators, would be to turn to other federal statutes and laws implementing the undue difficulty standard to gauge the application of the standard and consider just just how those applications can notify the undue difficulty analysis within the bankruptcy context.
This comment supports the conclusion that the primary inquiry into a debtor’s undue hardship claim must focus on the debtor’s current financial circumstances without undue regard to pre-bankruptcy conduct or assurance of persisting financial distress by evaluating the undue hardship standard in the context of public benefits, employment discrimination, financial aid eligibility, tax payment extensions, and discovery in civil procedure. Any meaning Congress provides to “undue difficulty” in § 523(a)(8) associated with the Bankruptcy Code will include factors that measure the future livelihood of this debtor if this woman is rejected bankruptcy relief in line with the debtor’s present economic circumstances.
Education loan financial obligation in america happens to be for a continuous increase becoming the next consumer debt category that is highest with additional than forty-four million borrowers keeping over one. 5 trillion bucks in education loan financial obligation. 1 Zack Friedman, Have student education loans Caused A Drop In Home Ownership? , F orbes, https: //www. Forbes.com/sites/zackfriedman/2019/01/18/student-loans-home-ownership/8d2596c3d22 (Jan. 18, 2019, 8:32 have always been). This figure represents a lot more than two. 5 times the actual quantity of education loan debt owed just a decade earlier in the day. 2 Anthony Cilluffo, 5 Facts About figuratively speaking, Pew analysis Center (Aug. 24, 2017), http: //www. Pewresearch.org/fact-tank/2017/08/24/5-facts-about-student-loans/. They are the data driving the literature explaining the education loan financial obligation crisis, an emergency driven by increasing tuition prices that exceed student economic a 3 Danielle Douglas-Gabriel, university costs faster that is rising Financial A Washington Post (Oct. 26, 2016), https: //www. Washingtonpost.com/news/grade-point/wp/2016/10/26/college-costs-rising-faster-than-financial-a Educational loan borrowers have actually increasingly discovered on their own struggling to repay their figuratively speaking as suggested by education loan standard rates, leading to adverse effects to an indiv 4 news release, U.S. Department of Education Releases National scholar Loan FY 2014 Cohort Default speed (Sept. 27, 2017); see additionally William Elliott & Melinda Lewis, Student Debt Impacts on Financial Well-Being: Research and Policy Implications, 29 J. Econ. Survs. 614, 624 (2015).
This comment views bankruptcy as one solution to the financial distress that students with burdensome student loans face because of the policy objectives driving bankruptcy law while there are many potential solutions to the rising costs of tuition and resulting dependency on student loans. Bankruptcy legislation is a statutory system for indiv 5 Robert B. Milligan, placing a conclusion to Judicial Lawmaking: Abolishing the Undue Hardship Exception for figuratively speaking in Bankruptcy, 34 U.C. Davis L. Rev. 221, 224 (2000). Two main public policy goals govern the point behind bankruptcy legislation. First, bankruptcy prov 6 id that is see at 225. 2nd, debtors get respite from creditors and get a fresh monetary start that is unburdened by the force and battles of onerous pre-existing debts. 7 Id. At 225–26.
The main focus of my remark is § 523(a)(8) associated with U.S. Bankruptcy Code, which determines a debtor’s power to discharge education loan financial obligation in the event that payment of education loan responsibilities imposes an “undue difficulty. ” 8 11 U.S.C. § 523(a)(8) (2018). My Comment examines the impact of Congress’s choice to delegate the task of interpreting the undue difficulty exception to your judiciary and contends that the statutory interpretation device of constant use provides a viable opportinity for reinterpreting the expression “undue hardship” to create a frequent and reasonable standard to simply help courts see whether students debtor’s scenario comprises undue hardship that necessitates release associated with the academic financial obligation. My research involves investigating relevant federal statutes and laws to ascertain the way the expression “undue hardship” is interpreted and used to ascertain whether that meaning and application can notify courts on what the typical can be used within the context of education loan release procedures to generate constant remedy for student-loan debtors.
First, this Comment provides history regarding the development of education loan programs as well as the bankruptcy system. Next, this Comment gives the doctrine that is legal tools of statutory construction, such as the presumption of constant use, that i take advantage of to guide the idea of searching across federal legislation to discern typical threads on the list of method undue difficulty is interpreted and used to aid notify the employment of the typical within the bankruptcy context. My Comment then analyzes the different federal conditions making use of the hardship that is speedyloan.net/installment-loans-ma/ undue by explaining the conditions, analyzing situation legislation choices interpreting the conventional, and discerning tips you can use to tell the utilization of the typical in determining whether figuratively speaking can be released in bankruptcy. Finally, this Comment proposes some essential policy factors that support the idea that the undue difficulty standard within the bankruptcy context has to be reevaluated by circuit courts which can be constantly confronted with your decision of exactly exactly what comprises an undue difficulty to justify the release of student loan financial obligation.