Penn. Higher Educ. Assist. Agency v. Hedlund, D. Or. Civ. #11-6281-AA (March 5, 2012)11 USC §523(a)(8), undue hardship, student loan In a case involving student loan debt with a complicated procedural history, the District Court reversed a bankruptcy court’s finding that the debtor was entitled to discharge of all but $32,080 of his $85,000 student loan debt. Although the debtor had satisfied the first two prongs of the three-pronged Brunner test for discharge based on undue hardship, the court found he had not satisfied the third prong, which required him to make a good faith effort to repay the loan. First, he did not use his best efforts to maximize his income. Further, the court was troubled by the debtor’s failure to make voluntary payments and to cooperate in negotiations with the lender to change payment terms. The court reinstated the full debt as excepted from discharge. Click here to view all Opinions. Click here to return to the home page.
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