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How to Discharge Student Loans in California, Orange County and Riverside

    Undue Hardship - Student Loan Discharge in Santa Ana Bankruptcy CourtDepending on where you live, you might be able to discharge your student loans in bankruptcy.  There are a number of factors that the Courts look at to determine whether the student loan debt is dischargeable.  The rules and laws that allow discharging student loan debt differ throughout the country because the Supreme Court has not made a ruling on the inconsistencies between the Courts.

    Discharging Student Loans in Bankruptcy

    If you live in Santa Ana, Orange County or Riverside you fall under the umbrella of California Bankruptcy Laws which fall under the laws of the Ninth Circuit US Court of Appeals.

    Undue Hardship and the Brunner Test

    The bankruptcy laws state that student loan debt is dischargeable if a bankruptcy debtor can show that requiring the debtor to pay the student loan “would impose an undue hardship on the debtor and the debtor’s dependents.”

    The question that follows is, “what is undue hardship?”  The Central District Court which has locations in Santa Ana, Orange County and Riverside follows the rules adopted by Ninth Circuit.  The Ninth Circuit has adopted what is known as the Brunner Test.

    The Brunner Test is a three part rule that a debtor must prove to show undue hardship.

    1)  Failure to maintain a minimal standard of living:

    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)  The failure to maintain a minimal standard of living will last a long time:

    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)  The Debtor has made a good faith effort to repay the loans

    That the debtor has made good faith efforts to repay the loans.