What are the differences in undue hardship across states?

What are the differences in undue hardship across states?

Undue hardship refers to the significant difficulty or expense that a debtor may face in repaying a debt. Different states have varying standards and interpretations of what constitutes undue hardship, especially in bankruptcy cases.

Can you give examples of how states differ in their definitions?

Sure! For instance, some states like New York apply a strict 'Brunner test' which requires showing that the debtor cannot maintain a minimal standard of living. In contrast, states like California may have a more lenient approach, considering additional factors.

How does this affect student loan discharges?

The differences in definitions can significantly impact student loan discharges. In states with stricter standards, it may be harder for borrowers to prove undue hardship and discharge their loans in bankruptcy.

Are there any recent changes in laws regarding this?

Yes, there have been discussions and proposals in various states to reform undue hardship standards, especially in light of rising student debt. It's important to stay updated on local laws.