654 B.R. 1
Bankr. D. Conn.2023Background
- Debtor Andrew Longo filed Chapter 7 (Sep 30, 2021) reporting $146,330.63 in student loans, including $127,910.26 in private loans owed to Discover; Discover did not appear in the adversary proceeding.
- After an initial Complaint failed to plead Brunner facts with sufficient detail, Debtor amended, the Clerk entered default, and the Court held evidentiary hearings to establish the truth of allegations.
- Debtor is a 32‑year‑old single, no dependents, employed full time as a lighting technician with gross 2021 income ≈ $52,961 and a monthly post‑tax surplus of ~$686 after expenses.
- Discover accelerated and charged off the two private loans (Loan 1: $62,576.15; Loan 2: $65,334.11) and served a collections summons; acceleration exposes Debtor to 25% wage garnishment under Conn. law.
- Applying the Second Circuit’s Brunner three‑prong test, the Court found the Debtor satisfied prongs 1–3 (minimal standard, likelihood of persistence given acceleration/garnishment risk, and minimal good‑faith efforts to repay).
- Relief granted: Loan 1 fully discharged ($62,576.15); Loan 2 partially discharged ($33,834.11), leaving $31,500 payable at $500/month from Aug 1, 2023 through Nov 1, 2028; no interest during that period unless Debtor defaults; variable‑rate obligation converted to 6.5% fixed on default.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether private student loans are dischargeable for undue hardship under 11 U.S.C. § 523(a)(8) (Brunner) | Longo: repayment would force him below a minimal standard of living given acceleration, garnishment risk, and limited income mobility | Discover: (no appearance) would argue Brunner not satisfied and loans nondischargeable | Court: Longo met all three Brunner prongs; undue hardship established as to accelerated balance |
| Whether loan acceleration/charge‑off and garnishment risk satisfy Brunner prong two (likely to persist) | Longo: acceleration + lack of private rehabilitation options and wage garnishment will persist for repayment period and preclude meaningful repayment | Discover: (presumptive) would counter that repayment period and future earnings could change; federal rehab options not applicable to private loans | Court: Acceleration and garnishment risk are persuasive additional circumstances showing hardship likely to persist for significant portion of repayment period |
| Whether partial discharge of private student loans is permissible and, if so, what relief is appropriate | Longo: seeks full discharge of both loans (or at least relief) | Discover: (presumptive) would oppose discharge; contend statute doesn’t authorize partial discharge | Court: Permitted measured partial relief; discharged Loan 1 fully and partially discharged Loan 2 with a structured payment plan and terms |
Key Cases Cited
- Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395 (2d Cir. 1987) (establishes three‑prong undue hardship test for student‑loan discharge)
- In re Tingling, 990 F.3d 304 (2d Cir. 2021) (applies Brunner standard and burden of proof)
- City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114 (2d Cir. 2011) (default‑judgment procedure and district court discretion)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility pleading standard)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must contain sufficient factual matter to be plausible)
- In re Nys, 308 B.R. 436 (B.A.P. 9th Cir. 2004) (nonexhaustive list of "additional circumstances" for Brunner prong two)