1st Circuit Upholds Two Student Loan Discharge Cases

Criticizes In Re Brunner as outdated and “hard-hearted”

By: Craig W. Stewart
Debtors filed separate Chapter 7 bankruptcy cases in Maine and Massachusetts with
Different fact patterns but with underlying similarities to undermine Brunner.

The First Circuit upheld the bankruptcy court when it ruled that both student loans were discharged. This Court criticized the Brunner and “totality of the circumstances” tests stating “Any test that allows for the Court to determine a student’s good or bad faith while living at a subsistence level, virtually strait-jacketed by circumstances, displaces the focus from where the statute would have it: Hardship. I believe this is the first crack in the iceberg moving forward towards resolving the billion dollars of outstanding student loan debt some of whom are calling the next mortgage crisis about to burst.

We believe and we would strongly argue the same legal principles the Court applied in this case to our bankruptcy judges here in Maryland.

If you are caught in an endless cycle of debt and are struggling to break free, please call us for a free consultation. The Law Firm of Laura Margulies & Associates, LLC has assisted thousands of clients through the bankruptcy process and is sensitive to their needs. Please call me for a free consultation today. Laura Margulies is a principal and Craig Stewart is the managing partner in the law firm of Laura Margulies & Associates, LLC. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia. To learn more about our firm visit our web site at http://www.law-margulies.com.