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 distinction, Nebraska Wesleyan University (2016). First, I wish to thank my faculty consultant, Professor Rafael Pardo, for their indispensable support in developing my remark. I might additionally prefer to thank the employees people and editors for the Emory Bankruptcy Developments Journal with regards to their work that is diligent in my Comment for publication. Finally, i would really like to thank my children and buddies due to their endless help.
An number that is increasing of suffer from monetary distress brought on by educational financial obligation. Some of these people look for respite 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 debt. The main focus of the Comment is § 523(a)(8) for the U.S. Bankruptcy Code, which sets forth academic financial obligation as a exclusion to bankruptcy release unless the payment of education loan responsibilities imposes an “undue difficulty. ” In drafting this area, Congress failed to define the expression “undue hardship, ” thus empowering the courts to find out just exactly just what comprises hardship that is undue the circumstances that deserve forgiveness of academic financial obligation. Being a total result, courts allow us many different tests to deliver a framework for determining whether a debt should always be dischargeable.
Congress’s choice to condition the relief of academic loans regarding the application of the vague and standard that is indeterminate turned out to be difficult for different reasons. One solution, perhaps maybe maybe not yet discussed by courts and commentators, would be to check out other federal statutes and regulations implementing the undue difficulty standard to gauge the effective use of the standard and consider exactly exactly how those applications can notify the undue difficulty analysis into the bankruptcy context.
By evaluating the undue difficulty standard within the context of general public advantages, work discrimination, educational funding eligibility, income tax repayment extensions, and finding in civil procedure, this remark supports the final outcome that the principal inquiry right into a debtor’s undue hardship claim must concentrate on the debtor’s present economic circumstances without undue regard to pre-bankruptcy conduct or assurance of persisting financial distress. Any meaning Congress provides to “undue difficulty” 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 monetary circumstances.
Education loan financial obligation in america happens to be for a constant increase becoming the next greatest unsecured debt category with additional than forty-four million borrowers keeping over one. 5 trillion bucks in education loan financial obligation. 1 Zack Friedman, Have Student 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 significantly more than two. 5 times the quantity of education loan debt owed just ten years early in the day. 2 Anthony Cilluffo, 5 information about figuratively speaking, Pew Research 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 pupil economic a 3 Danielle Douglas-Gabriel, university 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 on their own not able to repay their figuratively speaking as suggested by education loan standard prices, leading to undesireable 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 installment loans maryland Lewis, Student Debt Results on Financial Well-Being: Research and Policy Implications, 29 J. Econ. Survs. 614, 624 (2015).
While there are lots of potential answers to the increasing costs of tuition and ensuing dependency on student education loans, this remark views bankruptcy as you treatment for the monetary stress that pupils with burdensome student education loans face due to the policy goals driving bankruptcy legislation. Bankruptcy legislation is really a statutory procedure for indiv 5 Robert B. Milligan, Putting 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 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 acquire a fresh economic begin that is unburdened because of the stress 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 hardship. ” 8 11 U.S.C. § 523(a)(8) (2018). My Comment examines the effect of Congress’s choice to delegate the duty of interpreting the undue hardship exclusion to your judiciary and contends that the statutory interpretation device of consistent use provides a viable method for reinterpreting the expression “undue hardship” to create a frequent and reasonable standard to assist courts see whether students debtor’s situation comprises undue difficulty that necessitates release for the debt that is educational. My research involves investigating relevant federal statutes and laws to find out the way the phrase “undue hardship” is interpreted and used to ascertain whether that meaning and application can notify courts as to how the typical can be used into the context of education loan release procedures generate treatment that is consistent of debtors.
First, this Comment provides back ground 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 prefer 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 making use of the typical when you look at the bankruptcy context. My Comment then analyzes the many federal conditions making use of the undue difficulty standard by explaining the conditions, analyzing instance legislation choices interpreting the conventional, and discerning tips which can be used to share with making use of the standard in determining whether figuratively speaking can 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 should be reevaluated by circuit courts which can be constantly up against your decision of just just what comprises an undue difficulty to justify the release of education loan financial obligation.