Willkie Wins Pro Bono Bankruptcy Case

Firm prevails in pro bono bankruptcy action on behalf of client seeking to discharge student loans, demonstrating “undue hardship” pursuant to Section 523(a)(8) of the U.S. Bankruptcy Code.   

The firm recently prevailed in a pro bono bankruptcy action on behalf of a client seeking to discharge student loans, demonstrating “undue hardship” pursuant to Section 523(a)(8) of the U.S. Bankruptcy Code.   The case was heard in the United States Bankruptcy Court for the Southern District of New York.  Willkie’s client, a native of Peru, sought to have the remainder of her student loans discharged due to a series of unfortunate events and family obligations that made repayment overwhelmingly difficult.  While beset with a continuously unsteady employment situation, the Debtor found herself responsible for supporting herself, her mother and her two disabled brothers.  The applicable statute provides for discharge of student loans if it can be demonstrated that repayment of the loans “will impose an undue hardship on the debtor and the debtor’s dependents.”  The Court found that the Debtor successfully demonstrated “undue hardship” as defined by the governing case law established in the 1987 case of Brunner v. New York State Higher Education Services Corp.  Specifically, Willkie proved to the Court (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.   The Court explained that “Congress drafted the bankruptcy laws so as to provide an honest debtor with a discharge and a fresh start.”   While the precedents were overwhelmingly against the Debtor's position, the Court found that she satisfied all of the elements of the Brunner test and is therefore entitled to a judgment discharging her student loans.  The case was handled by partners Terence McLaughlin and Marc Abrams and associate Morris Massel.