Brunner v. New York State Higher Educ. Services Corp.

Citation831 F.2d 395
Decision Date14 October 1987
Docket NumberNo. 41,D,41
Parties42 Ed. Law Rep. 535, Bankr. L. Rep. P 72,025 Marie BRUNNER, Appellant, v. NEW YORK STATE HIGHER EDUCATION SERVICES CORP., Appellee. ocket 87-5013.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 395

831 F.2d 395
42 Ed. Law Rep. 535, Bankr. L. Rep. P 72,025
Marie BRUNNER, Appellant,
v.
NEW YORK STATE HIGHER EDUCATION SERVICES CORP., Appellee.
No. 41, Docket 87-5013.
United States Court of Appeals,
Second Circuit.
Argued Sept. 22, 1987.
Decided Oct. 14, 1987.

Page 396

Marie Brunner, pro se.

Frederick J. Schreyer, Albany, N.Y., for appellee.

Before LUMBARD, OAKES and KEARSE, Circuit Judges.

PER CURIAM:

Marie Brunner, pro se, appeals from a decision of the United States District Court for the Southern District of New York, Charles S. Haight, Judge, which held that it was error for the bankruptcy court to discharge her student loans based on "undue hardship," 46 B.R. 752 (Bankr.D.C.N.Y.1985). We affirm.

While this court is obliged to accept the bankruptcy court's undisturbed findings of fact unless they are clearly erroneous, it is not required to accept its conclusions as to the legal effect of those findings. Montco, Inc. v. Glatzer (In re Emergency Beacon Corp.), 665 F.2d 36, 40 (2d Cir.1981) (citing Queens Blvd. Wine & Liquor Corp. v. Blum, 503 F.2d 202 (2d Cir.1974); R.Bankr.P. 810 (current version, see R.Bankr.P. 8013); Bank of Pa. v. Adlman, 541 F.2d 999, 1005 (2d Cir.1976)). Whether not discharging Brunner's student loans would impose on her "undue hardship" under 11 U.S.C. Sec. 523(a)(8)(B) requires a conclusion regarding the legal effect of the bankruptcy court's findings as to her circumstances. Therefore, the bankruptcy court's conclusion of "undue hardship" properly was reviewed by the district court.

As noted by the district court, there is very little appellate authority on the definition of "undue hardship" in the context of 11 U.S.C. Sec. 523(a)(8)(B). Based on legislative history and the decisions of other district and bankruptcy courts, the district court adopted a standard for "undue hardship" requiring a three-part showing: (1) that the debtor cannot maintain, based on current income and expenses, a "minimal" standard of living for herself and her dependents if forced to repay the loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) that the debtor has made good faith efforts to repay the loans. For the reasons set forth in the district court's order, we adopt this analysis. The first part of this test has been applied frequently as the minimum necessary to establish "undue...

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  • Old Myths Die Hard: District Court Reverses Bankruptcy Court’s Discharge of Student Loan Debt Under Brunner
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    ...the debtor’s dependents” (11 U.S.C. § 523(a)(8)). The Second Circuit in Brunner v. N.Y. State Higher Educ. Servs. Corp. (In re Brunner), 831 F.2d 395 (2d Cir. 1987), set forth the following test for “undue hardship”: That the debtor cannot maintain, based on current income and expenses, a “......
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    ...the debtor’s dependents” (11 U.S.C. § 523(a)(8)). The Second Circuit in Brunner v. N.Y. State Higher Educ. Servs. Corp. (In re Brunner), 831 F.2d 395 (2d Cir. 1987), set forth the following test for “undue hardship”: That the debtor cannot maintain, based on current income and expenses, a “......
  • Eighth Circuit Applies Novel Test In Recent Student Loan Discharge Case
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    ...Higher Education Services to determine whether a student loan imposes an undue hardship, and is therefore dischargeable in bankruptcy. 831 F.2d 395 (2d Cir. 1987). Under the Brunner test, a student loan debtor must She cannot maintain a minimal standard of living for herself and her depende......
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    ...under the current caselaw, including under its most common test based on Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2d Cir. The process of seeking discharge of student loan debt requires commencement of an adversary proceeding which is litigation which can beco......
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