There are also proposed changes to the homestead exemption, allowing debtors to protect up to $250,000 in equity in their homes, allowing more people to qualify for chapter 7 bankruptcy.

Finally, they are seeking to allow for discharge of student loans in bankruptcy as well, which is currently very difficult to do under the current bankruptcy caselaw. While it is possible, student loan discharge is rarely granted.

I feel these first two provisions make sense, and have a good intent. Congress has been talking about changing the student loan dischargeability laws, but should propose this as separate legislation to be discussed, and studied for its impact. But legislation always has extra provisions weaved into the proposals, so this is nothing new. I would support some modifications of the student loan dischargeability laws, but I am not in favor of a straight elimination of student debt.

The legislation can be reviewed here: The Medical Bankruptcy Fairness Act of 2021

The post The Medical Bankruptcy Fairness Act of 2021 proposed legislation addresses Medical Bankruptcy and Student Loan Assistance appeared first on Chicago Bankruptcy Lawyer.

http://www.wsj.com/articles/supreme-court-denies-appeal-on-student-loan-erasure-1452527286?platform=hootsuite

The post Still cannot discharge Student loans easily in bankruptcy. Supreme Court declined to hear appeal. appeared first on Chicago Bankruptcy Lawyer.

The 3 prong test states:
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 hardship.” See, e.g., Bryant v. Pennsylvania Higher Educ. Assistance Agency (In re Bryant), 72 B.R. 913, 915 (Bankr.E.D.Pa.1987); North Dakota State Bd. of Higher Educ. v. Frech (In re Frech), 62 B.R. 235 (Bankr.D.Minn.1986); Marion v. Pennsylvania Higher Educ. Assistance Agency (In re Marion), 61 B.R. 815 (Bankr.W.D.Pa.1986). Requiring such a showing comports with common sense as well.

The further showing required by part two of the test is also reasonable in light of the clear congressional intent exhibited in section 523(a)(8) to make the discharge of student loans more difficult than that of other nonexcepted debt. Predicting future income is, as the district court noted, problematic. Requiring evidence not only of current inability to pay but also of additional, exceptional circumstances, strongly suggestive of continuing inability to repay over an extended period of time, more reliably guarantees that the hardship presented is “undue.”

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