Education loan Discharge: Reevaluating Hardship that is undue under 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 priceless support in developing my remark. I’d additionally want to thank the employees users and editors regarding the Emory Bankruptcy Developments Journal with their diligent operate in planning my Comment for publication. Finally, I wish to thank my children and buddies with their endless help.
An number that is increasing of suffer from monetary stress brought on by academic debt. Some of these people look for rest from that stress through the bankruptcy system, where they have to establish that repaying their academic financial obligation would impose a hardship that is undue purchase to acquire a release of these financial obligation. The main focus with 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 repayment of education loan responsibilities imposes an “undue difficulty. ” In drafting this area, Congress would not determine the expression “undue hardship, ” thus empowering the courts to ascertain exactly exactly what comprises hardship that is undue the circumstances that deserve forgiveness of academic financial obligation. As outcome, courts allow us a number of tests to present a framework for determining whether a financial obligation must be dischargeable.
Congress’s decision to concern the relief of academic loans in the application of a obscure and indeterminate standard has turned out to be burdensome for different reasons. One solution, maybe not yet talked about by courts and commentators, would be to aim to other federal statutes and laws implementing the hardship that is undue to guage the application of the standard and consider exactly just how those applications can notify the undue difficulty analysis into 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 hardship” in § 523(a)(8) regarding the Bankruptcy Code will include factors that assess the livelihood that is future of debtor if this woman is rejected bankruptcy relief on the basis of the debtor’s present economic circumstances.
Education loan financial obligation in the usa happens to be for a continuous increase becoming the next consumer debt category that is highest with increased 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 AM). This figure represents a lot more than two. 5 times the amount of education loan debt owed just ten years early in the day. 2 Anthony Cilluffo, 5 factual statements 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 literary works describing the education loan financial obligation crisis, an emergency driven by increasing tuition prices that exceed pupil financial 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 not able to repay their figuratively speaking as suggested by online installment loans direct lenders hawaii education loan standard prices, leading to unwanted 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 just a statutory process for indiv 5 Robert B. Milligan, placing a finish to Judicial Lawmaking: Abolishing the Undue Hardship Exception for student education loans in Bankruptcy, 34 U.C. Davis L. Rev. 221, 224 (2000). Two public that is main goals govern the reason behind bankruptcy legislation. First, bankruptcy prov 6 id that is see at 225. 2nd, debtors get rest from creditors and acquire a new monetary begin that is unburdened by the pressure and battles of onerous pre-existing debts. 7 Id. At 225–26.
The main focus of my Comment is § 523(a)(8) regarding the 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 effect of Congress’s choice to delegate the job of interpreting the undue difficulty exception into the judiciary and contends that the statutory interpretation device of constant use supplies a viable opportinity for reinterpreting the expression “undue hardship” to create a regular and reasonable standard to simply help courts see whether a student debtor’s situation comprises undue difficulty that necessitates release associated with the academic financial obligation. My research involves investigating relevant federal statutes and laws to ascertain how a expression “undue hardship” is interpreted and used to ascertain whether that meaning and application can notify courts on what the conventional can be used when you look at the context of education loan release procedures to produce treatment that is consistent of debtors.
First, this Comment provides history from the development of education loan programs therefore the bankruptcy system. Next, this Comment offers the doctrine that is legal tools of statutory construction, like the presumption of constant use, that I use to guide the idea of looking across federal laws and regulations to discern typical threads on the list of method undue difficulty is interpreted and used to aid notify making use of the typical when you look at the bankruptcy context. My Comment then analyzes the different federal conditions utilising the hardship that is undue by describing the conditions, analyzing instance legislation choices interpreting the conventional, and discerning key points which you can use to see making use of the conventional in determining whether figuratively speaking might be discharged in bankruptcy. Finally, this Comment proposes some crucial policy factors that offer the idea that the undue difficulty standard within the bankruptcy context has to be reevaluated by circuit courts which are continually confronted with your choice of just exactly what comprises an undue difficulty to justify the release of education loan financial obligation.