Accrued Interest on Student Loan Discharged as Undue Hardship

Posted by NCBRC – May 3, 2019

A Kansas bankruptcy court did not err in granting the debtor a discharge of the accrued interest on her student loans where she met the Tenth Circuit’s flexible version of the Brunner test, and the court has equitable power to grant less than a complete discharge. ECMC v. Metz, No. 18-1281 (May 2, 2019).

The debtor, age 59, was never in default on her student loans. Though she was continuously employed over the repayment period, the amount she owed grew over time from the original loan amount of $16,613.73, to $67,277.88. Beginning in 2001, she filed three chapter 13 bankruptcies and made all payments under her plans, receiving a discharge in the first two. In the third and current bankruptcy the debtor sought to discharge her consolidated student loan. The bankruptcy court…