The Brunner Test is a hurdle many bankruptcy filers have to overcome to discharge their student loan debt due to undue hardship. Passing it is no easy feat. Borrowers have to show they can't pay their loans and maintain a minimal standard of living, their financial circumstances aren't likely to improve, and they've made a good-faith effort to pay back the debt.
Discharging student loans in bankruptcy is possible if you can show they're causing you and your dependents an undue hardship. Most bankruptcy courts will analyze your proof using the Brunner Test, which requires you to demonstrate you're struggling financially, your struggles will continue, and that you've made a good faith effort to repay.
Ahead, learn what the Brunner Test is and how to pass it to discharge your student loan debt.
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What is the Brunner Test?
The Brunner Test is a tool created by bankruptcy judges to measure whether student loans are causing a debtor undue or ordinary hardship. Judges needed it because lawmakers never defined what "undue hardship" meant, even though they changed the bankruptcy code several times over the years.
The test comes from a 1987 case in which a woman named Marie Brunner tried to get rid of her student loans less than a year after earning a master's degree. To discourage people from rushing to bankruptcy after graduating, the New York judge laid out a three-prong test that grants a discharge if the answer to each question is "yes":
- Have you made a good-faith effort to repay the loans?
- Are you unable to maintain a minimal standard of living while making the payments?
- Is your financial situation likely to persist?
Soon, other judges found the three-part tool useful and used it in their cases, referring to it as the Brunner Test. You can click here to read Brunner v. New York State Higher Education Services Corp., (2d Cir. 1987).
Although popular, the test is not without criticism. Bankruptcy judges have recently begun arguing it's "unintentionally harsh" and not "meant for adults still on the hook for student-loan debt years after college," according to an investigate report by the Wall Street Journal. For example, in a concurring opinion for the bankruptcy appellate panel decision in the United States Court of Appeals for the Ninth Circuit, judge Jim D. Pappas wrote, "the analysis required by Brunner to determine the existence of an undue hardship is too narrow, no longer reflects reality, and should be revised...".
Despite the attacks, the Brunner Test remains the law of the land in many bankruptcy courts across America.
How the Brunner Test works
The Brunner Test works by looking at your current income, income, and student loan debt to see if you have a shot at paying back your lenders. Although it crunches numbers, there's no "Brunner Test Calculator." It's simply a three-part system used to determine whether the hardship you're experiencing is ordinary or undue.
You first have to file a Chapter 7 or Chapter 13 bankruptcy case to get started. Bills for credit cards and medical expenses will be wiped away when your case ends. But to get a discharge of student loans, you'll need to file an adversary proceeding, which is an entirely separate process not covered by the fee you paid your bankruptcy attorney.
That filing kicks off the battle to wipe out your loans. It also gets the judge involved. If you cannot reach an agreement with your student loan creditors to reduce or eliminate the debt, the judge will analyze the evidence using the Brunner Test and then decide a victor.
How to pass the Brunner Test
To pass the Brunner Test, you have to convince the bankruptcy judge you're struggling financially, your struggles will continue, and that you've made a good faith effort to repay your student loan debt. It's a tough sell. And there's no universal way to do it.
The Brunner test is subjective. You could present the same evidence to two different judges in the same building and get two different results. Because of that variance, the best way to learn how to pass the Brunner test is to read old bankruptcy cases. You'll pick up which facts helped student loan borrowers meet the undue hardship standard. Google Scholar is a free tool that lets you research old cases.
Learn More: What Happens to Student Loans in Chapter 13?
Facts to Pass Brunner Test
Here's a shortlist of relevant facts I found that matter when analyzing a debtor's chances at proving undue hardship using the Brunner Test:
- Are the loans private or federal student loans? Loans from the Department of Education are harder to discharge than private loans because they offer income-driven repayment plans and loan forgiveness programs.
- Are you eligible for an income-driven repayment plan? $0-low monthly payments make passing the test hard.
- How much student debt do you owe? The higher your balance, the more challenges you'll face trying to repay the debt.
- What's your current monthly income? Earning near the poverty level for several years is an indicator that your financial situation is likely to remain the same for a significant portion of the repayment period of the student loans.
- Do you work full-time or part-time? Full-time work indicates that you're maximizing your income potential in your current role.
- Are you married? Your partner's income will affect your ability to discharge your student loans.
- Do you have children? Courts typically allow increased expenses for daycare and other child-related costs. Plus, they're often sympathetic if your child's behavior interferes with your work.
- Are you or your dependents disabled? Disabilities that limit the type of work you can perform and how often you can do it increase your chances of getting a discharge.
- How many student loan payments have you made? Making monthly payments, consolidating the loans for a lower payment, and refinancing to get a lower interest rate show a good faith effort to repay the loans.
- Have you used deferments/forbearances? Using deferments and forbearances shows a good faith effort to repay your debts.
Lastly, are there any other additional circumstances that make it affect your ability to pay back your student loans? If so, how long will that state of affairs last?
Learn More: What Happens to Student Loans in Chapter 7?
The Bottom Line
News headlines may make it seem that people have a better chance of getting rid of their student loans. But that's not reality. Bankruptcy law hasn't eliminated the rigorous Brunner Test. You'll need to square off against it depending on where you live.
You can fight it on your own, or you can hire an attorney to help you. Speak with a consumer bankruptcy law firm near you to explore your options for debt relief. You can also schedule a call with me if they cannot help. For the past several years, I've worked as a student loan bankruptcy lawyer assisting people across the nation get bankruptcy discharges for their education debt.