The following is a case update written by Isabelle Cho, Summer Associate at Danning, Gill, Israel & Krasnoff, LLP, analyzing a recent case of interest, In re Love, 649 B.R. 556, 560 (Bankr. E.D. Cal. 2023).
A bankruptcy court for the Eastern District of California, Hon. Christopher M. Klein, held that the student loan liability of a Chapter 7 debtor is discharged after satisfying, by the requisite preponderance of evidence standard, all three elements of the Brunner-Pena test for establishing undue hardship. The Court also analyzed the differing approaches of the Ninth and Second Circuits in interpreting the test. Importantly, the Court cited the Supreme Court case U.S. Bank Nat’l Ass’n v. Village at Lakeridge, 138 S. Ct. 960 (2018), to highlight that the division of roles between trial and appellate courts depend on the nature of the “mixed question” of law and fact. Applying the principles of Lakeridge, the Court determined that since evaluating undue hardship related to student loan debt involves a fact-based inquiry, appellate courts should apply a “clear error” standard instead of a de novo review. In re Love, 649 B.R. 556 (Bankr. E.D. Cal. 2023).
Here’s a link to the writeup on the CLA website: click here.
To read the full published decision click here.