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Andrew v. Educ.Credit Mgmt. Corp. (In re Andrew) (Case No. 04-01685; A.P. No. 04-00062) 07/25/2005

A creditor sought a declaration that debts arising from an educational loan is non-dischargeable under 11 U.S.C. § 523(a)(8).  The Plaintiff asserted that the debt was discharged in her Chapter 7 case.  Since the debt arose from an education benefit "made, insured, or guaranteed by a governmental unit," the burden shifts to the Plaintiff to demonstrate that excepting the debt from discharge will impose an undue hardship on her and her dependents.  See 11 U.S.C. § 523(a)(8).  Under the undue hardship test, the Plaintiff must establish the three prongs outlined in Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395, 396 (2nd Cir. 1987).  In this case, the Plaintiff failed to meet her burden of proving the first two prongs of the Brunner test for undue hardship.  Plaintiff would have disposable income after making the payment of her student loans and her total household income is expected to increase during the repayment period of the loan.  Accordingly, the debt is nondischargeable.

Monday, July 25, 2005
Burden of Proof
Student Loan