Yes.
As reported by Robin Miller of CBAR, a Debtor with limited earning capacity satisfied Brunner test for discharge of student loan debt.
The 35-year-old Chapter 7 debtor, who was divorced with two minor children, satisfied the second, or “additional circumstances,” prong of the Brunner “undue hardship” test for the discharge of student loan debt, which required that her financial situation be likely to persist for a significant part of the repayment period, although she was in good health and her earnings were rising, and the student loan creditor asserted that she might have additional funds in seven or eight years when her children reached the age of majority. The debtor did not have money or time to complete courses of study in order to qualify for much more than a minimum wage job; it was pure speculation that the debtor’s financial circumstances would significantly improve upon emancipation of her children; and, while her income was steadily rising, it was rising at the rate of 75 cents per hour every year and did not currently allow her to obtain shelter and other basic necessities without the support of her mother and stepfather.
Factors relevant to good faith prong of Brunner test:
Under the final, or good faith, prong of the Brunner “undue hardship” test for the discharge of student loan debt, the issue is not so much whether the debtor has made a good-faith effort to repay the loan as it is a question of the debtor’s overall good faith in regard to the student loan. Among the factors that bankruptcy court may consider are (1) whether the debtor’s failure to pay was due to factors beyond her reasonable control; (2) whether the debtor used all available resources to pay the student loan debt; (3) whether the debtor was making her best effort to maximize her earning potential; (4) how long the debtor waited after the loans first became due to seek to discharge the debt; (5) the percentage of student loan debt in relation to the debtor’s total debt; (6) whether the debtor obtained a tangible benefit from student loans; and (7) the debtor’s repayment history and efforts to obtain employment, maximize income, minimize expenses, and participate in alternative repayment programs. See In re Fields, 286 Fed. Appx. 246 (6th Cir. 2007) (listing first six factors); In re Trudel, 514 B.R. 219 (6th Cir. B.A.P. 2014) (adding seventh factor).
Debtor satisfied good faith prong of Brunner test although she declined to participate in income-contingent repayment plan:
Here, the debtor satisfied the good faith prong of the Brunner test, and was entitled to discharge her nearly $80,000 in student loan debt, although she had made no voluntary payments on the debt, had used her income tax refund to pay for her children’s medical and school needs and to repair her 11-year-old car, and had declined to participate in an income-contingent repayment plan. The debtor did not have funds to make any voluntary payments on her student loans, she did not spend her tax refund on anything frivolous but on necessities, and she reasonably declined to participate in a program that would result in no payments on the student loan debt for the foreseeable future, while leaving her with an unpayable debt hanging over her head for the next 25 years. A debtor’s decision not to participate in a repayment program is relevant as to intent to repay the loans, but is not a per se indication of lack of good faith. In re Barrett, 487 F.3d 353 (6th Cir. 2007). A debtor must, however, provide a “probative explanation for their behavior.” In re Trudel, 514 B.R. 219 (6th Cir. B.A.P. 2014).
In re Lamento, 520 B.R. 667 (Bankr. N.D. Ohio, Oct. 29, 2014)
(case no. 1:13-bk-18398; adv. proc. no. 1:14-ap-1054) (Chief Bankruptcy Judge Pat E. Morgenstern-Clarren)