Education loan Discharge: Reevaluating Hardship that is undue under Presumption of Consistent Usage
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 wish 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 people and editors associated with Emory Bankruptcy Developments Journal with their work that is diligent in my Comment for publication. Finally, I wish to thank my children and buddies because of their endless help.
An increasing amount of People in the us suffer from monetary stress brought on by academic financial obligation. Some of these people look for rest from that distress through the bankruptcy system, where they need to establish that repaying their academic debt would impose a hardship that is undue order to acquire a discharge of these financial obligation. The main focus for this Comment is § 523(a)(8) of this 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 didn’t determine the expression “undue hardship, ” thus empowering the courts to find out just exactly what comprises undue difficulty and the circumstances that deserve forgiveness of academic financial obligation. As outcome, courts allow us a number of tests to give a framework for determining whether a debt ought to be dischargeable.
Congress’s choice to shape the relief of academic loans in the application of a obscure and standard that is indeterminate turned out to be difficult for different reasons. One solution, perhaps perhaps maybe not yet talked about by courts and commentators, is always to turn to other federal statutes and regulations implementing the hardship that is undue to judge the use of the standard and consider 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 difficulty” in § 523(a)(8) associated with the Bankruptcy Code will include factors that measure the livelihood that is future of debtor if she actually is rejected bankruptcy relief on the basis of the debtor’s current economic circumstances.
Introduction
Education loan financial obligation in the United States happens to be on a continuous increase becoming the 2nd greatest unsecured debt category with increased than forty-four million borrowers keeping over one. 5 trillion bucks in education loan debt. 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 total amount of education loan debt owed just ten years early in the day. 2 Anthony Cilluffo, 5 factual statements about student education loans, 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 rising tuition rates that exceed pupil monetary a 3 Danielle Douglas-Gabriel, College expenses increasing quicker than 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 by themselves not able to repay their figuratively speaking as suggested by education loan standard prices, leading to side 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 Results on Financial Well-Being: Research and Policy Implications, 29 J. Econ. Survs. 614, 624 (2015).
While there are lots of possible answers to the rising costs of tuition and ensuing dependency on figuratively speaking, this remark views bankruptcy as one way to the financial stress that pupils with burdensome student education loans face due to the policy goals driving bankruptcy law. Bankruptcy legislation is really a statutory apparatus 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). installment loans id Two main public policy goals govern the point behind bankruptcy legislation. First, bankruptcy prov 6 identify id. At 225. 2nd, debtors get rest from creditors and get a new economic begin that is unburdened because of the force and battles of onerous pre-existing debts. 7 Id. At 225–26.
The main focus of my remark 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 exclusion to your judiciary and contends that the statutory interpretation device of constant use offers a viable opportinity for reinterpreting the expression “undue hardship” to create a frequent and reasonable standard to simply help courts determine whether students debtor’s situation comprises undue difficulty that necessitates release associated with 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 find out whether that meaning and application can notify courts as to how the typical can be utilized within the context of education loan discharge procedures to generate treatment that is consistent of debtors.
First, this Comment provides history regarding the development of education loan programs while the bankruptcy system. Next, this Comment offers the appropriate doctrine behind tools of statutory construction, such as the presumption of constant use, that i take advantage of to aid the thought of searching across federal regulations to discern typical threads on the list of method undue difficulty is interpreted and used to greatly help notify making use of the standard within the bankruptcy context. My Comment then analyzes the different federal conditions utilising the hardship that is undue by explaining the conditions, analyzing situation legislation choices interpreting the conventional, and discerning tips you can use to see the employment of the standard in determining whether student education loans could be released in bankruptcy. Finally, this Comment proposes some essential policy factors that offer 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 just just exactly what comprises an undue difficulty to justify the release of education loan financial obligation.
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