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STUDENT LOANS, BANKRUPTCY AND HOPE

More than $100 billion of student loans were taken out in 2010. Total loans, whether in the form of federal student aid or private student loans, exceed $1 trillion, which means more is owed on student loans than on credit cards.

Student loans are extremely difficult to discharge in bankruptcy.  The standards for discharging student loans are discussed in detail in a prior article. Under the present law, to discharge your student loan you must prove that repayment would impose undue hardship on you and your dependents, i.e., you will have to show that 1) you cannot maintain, a “minimal” standard of living if forced to repay the student loans; 2) additional circumstances show that this state of affairs is likely to persist for a significant portion of the repayment period; and 3) you have made good faith efforts to repay the loans. (Brunner v. New York State Higher Educ. Servs. Corp., 831 F. 2d 395 (2d Cir. 1987). Not all courts use this test. Some courts will be more flexible, some less. This is a very difficult burden.

H.R. 2028, the Private Student Loan Bankruptcy Fairness Act of 2011, has been referred to the House Committee on the Judiciary. This legislation would make private student loans (as opposed to government-made or guaranteed student loans) dischargeable in bankruptcy. Referral to committee is the first step in the legislative process. This legislation, like the majority of bills, may never make it out of committee.

Below are the members of the House Committee on the Judiciary.

Rep. Lamar Smith [R-TX21] Ranking Member

Rep. John Conyers [D-MI14]

Rep. Sandy Adams [R-FL24]

Rep. Howard Berman [D-CA28]

Rep. Steven Chabot [R-OH1]

Rep. Jason Chaffetz [R-UT3]

Rep. Judy Chu [D-CA32]

Rep. Howard Coble [R-NC6]

Rep. Steve Cohen [D-TN9]

Rep. Ted Deutch [D-FL19]

Rep. Randy Forbes [R-VA4]

Rep. Trent Franks [R-AZ2]

Rep. Elton Gallegly [R-CA24]

Rep. Louis Gohmert [R-TX1]

Rep. Robert Goodlatte [R-VA6]

Rep. Trey Gowdy [R-SC4]

Rep. Tim Griffin [R-AR2]

Rep. Darrell Issa [R-CA49]

Rep. Sheila Jackson-Lee [D-TX18]

Rep. Henry Johnson [D-GA4]

Rep. Jim Jordan [R-OH4]

Rep. Steve King [R-IA5]

Rep. Zoe Lofgren [D-CA16]

Rep. Daniel Lungren [R-CA3]

Rep. Thomas Marino [R-PA10]

Rep. Jerrold Nadler [D-NY8]

Rep. Mike Pence [R-IN6]

Rep. Ted Poe [R-TX2]

Rep. Ben Quayle [R-AZ3]

Rep. Mike Quigley [D-IL5]

Rep. Tom Reed [R-NY29]

Rep. Dennis Ross [R-FL12]

Rep. Linda Sánchez [D-CA39]

Rep. Robert Scott [D-VA3]

Rep. James Sensenbrenner [R-WI5]

Rep. Debbie Wasserman Schultz [D-FL20]

Rep. Maxine Waters [D-CA35]

Rep. Melvin Watt [D-NC12]

Res.Com. Pedro Pierluisi [D-PR]

You are encouraged to contact these representatives to express your opinion concerning the proposed legislation.