Student Debt Discharged After Criticism of Punitive Damages
In January 2020, the Chief US Bankruptcy Judge of the Southern District of New York made what is being called a stunning decision regarding the forgiveness of student loan debt through bankruptcy. Judge Cecilia Morris ruled that Jared Rosenberg’s student debt, which currently amounts to over $200,000, could be erased.
The Brunner Test
The precedent for this decision was made over 30 years ago. Judge Morris claims she was only applying the Brunner Test as it was intended when it was created. This test aims to determine whether or not a debtor can maintain a certain standard of living throughout most of the repayment period for the loan. This standard of living is based on household size, cost of living and other factors. Also considered is if you’ve made some effort to repay the loans despite your financial situation.
Previous Standards
While the Brunner Test seems straightforward, many previous rulings have set standards that make it seem nearly impossible to win forgiveness for student loan debt. Most bankruptcy lawyers won’t attempt the process of suing for forgiveness except in the case of severe disability, as these cases are much more likely to be approved.
The Future of Student Debt Forgiveness
Because of this newest ruling for student debt forgiveness, there are likely to be many more students filing for bankruptcy. While the decision will still have to hold up on appeal, the outcome is likely to change the way bankruptcy attorneys approach student loan debt. Currently, only about 400 of the 250,000 student loan debtors who file for bankruptcy every year also file to have their loans forgiven.
Student loan debt can be overwhelming and significantly impact your quality of life. Schedule a free initial consultation with Gingold & Gingold, LLC to learn more about your financial relief options.
