Dischargeability Of Student Loans
Interpreting Bankruptcy Code Section 523(a)(8)
Constructing The Plain Text Of The Bankruptcy Code In Determining Whether A Student Loan Can Be Discharged Or Eliminated In Bankruptcy
Part One of A Series By Clearwater Florida Bankruptcy Lawyer Jay Weller
Please refer to the Text of the prior Post which repeats, word for word, the Text of the Bankruptcy Code as its applies to Student Loans. Section 523(a)(8) of the Bankruptcy Code defines when Student Loans can be Discharged or eliminated in Bankruptcy. I highlighted the important terms contained in this Bankruptcy Code Section, and no we will essentially outline when Student Loans can be Discharged, according to the plain meaning of the Bankruptcy Code. Plain meaning is important because the proper method of interpreting a Statute, whether it is Bankruptcy Law or the Affordable Care Act, is to first apply the plain meaning of the Statute. If the reader, whether he is a Bankruptcy Attorney or Judge, is unable to ascertain the plain meaning, then he must either attempt to discern the intent of the Lawmakers who created the Statute, in analyzing the Statute.
If you take Bankruptcy Code Section 523(a)(8) and place it in outline form it would appear as so:
STUDENT LOANS ARE NOT DISCHARGED SUCH STUDENT LOAN CREATES AN UNDUE HARDSHIP FOR THE DEBTOR AND THE DEBTORS’ DEPENDANTS
- IS AN EDUCATIONAL OVERPAYMENT OR LOAN
- MADE, INSURED, OR GUARANTEED BY A GOVERNMENTAL UNIT
- MADE, INSURED, OR GUARANTEED BY A NONPROFIT INSTITUTION
- ANY PROGRAM FUNDED IN WHOLE OR IN PART BY A GOVERNMENTAL UNIT
OR NONPROFIT INSTITUTION
- AN OBLIGATION TO PAY FUNDS RECEIVED AS:
- AN EDUCATIONAL BENEFIT OR SCHOLARSHIP OR STIPEND
- ANY OTHER EDUCATIONAL LOAN THAT IS A QUALIFIED STUDENT LOAN AS DEFINED IN SECTION 221(d)(1) OF THE INTERNAL REVENUE CODE OF 1986, INCURRED BY THE DEBTOR WHO IS AN INDIVIDUAL
This outline is think is much easier to read, and is a demonstration of how Legislatures should write Law.
Basically, in order for a Student Loan to be Discharged in a Bankruptcy, the Bankruptcy Attorney on the Debtor’s behalf, or the Debtor representing himself individually, must prove the Student Loan Creates an UNDUE HARDSHIP on the Debtor and the Debtor’s Dependants, OR is NOT “A” OR “B” OR “C”.
So, your equation is:
UNDUE HARDSHIP + (A OR B OR C) = STUDENT LOAN DISCHARGE
In the next Post, we will discuss in more detail, according to the plain reading of the Text of Section 523 of the Bankruptcy Code, how to analyze when a Student Loan may be Discharged in Bankruptcy.