In the Matter of Bach v. Sallie Mae

The subject matter of this case is the issue of determining 'undue hardship' in the discharge of student loans under the Bankruptcy Code. Generally, educational loans cannot be discharged 'unless the debtor can demonstrate that payment of such loans would cause him undue hardship'. The problem, however, is that the drafters of the Code left the definition of 'undue hardship' up to the courts resulting in a variety of tests.
This case study examines a recent application of totality of circumstances test used in the 8th circuit. It also explores three other tests applied in various jurisdictions, specifically minimum standard of living, the Johnson test and the Bryant Poverty Test.