Co-signor for ex-spouse’s student loans discharged in bankruptcy

Co-signor for ex-spouse’s student loans discharged in bankruptcy

In the case of In re Zumbro, the U.S. Eleventh Circuit Court of Appeals ruled that the district court was correct in upholding the bankruptcy court’s order decision determining that student loans co-signed by the debtor were dischargeable in bankruptcy under a hardship exception.

The “Brunner test

Bankruptcy courts apply a three-prong Brunner test for ordering a discharge of student loan debt. The debtor must prove the following:

  • An inability to maintain a minimal standard of living for the debtor and the debtor’s dependents, based on current income and expenses, if required to repay the loans.
  • Additional circumstances showing that this inability is likely to persist for a significant portion of the loan repayment period.
  • Good-faith efforts on the part of the debtor to repay the loans.


During her marriage, the debtor was a co-signor on three promissory notes to obtain loans to help finance her former spouse’s medical education. The former spouse finished medical school and completed his residency, but practiced medicine for only a few years. In 2003, the former spouse surrendered his medical license. The former spouse was later arrested and convicted on criminal charges and has been incarcerated since 2005. The debtor also filed divorce proceedings in 2005. Aside from the student loans, the debtor also incurred large consumer debts during the marriage due to the former spouse’s lavish lifestyle. The debtor’s obligation under two of the promissory notes became fully due in 2006. Her obligation under the third promissory note does not become fully due until 2016.

Procedural history

The debtor filed a petition for bankruptcy relief under Chapter 13 and commenced legal proceedings to obtain a discharge of the student loan debt. The bankruptcy court originally ruled that the student loans were nondischargeable since the debtor had not satisfied her burden of proof regarding the second prong of the Brunner test. The bankruptcy court incorrectly believed that the student loans could be restructured and refinanced under the provisions of certain federal regulations which allow borrowers of certain government-issued student loans to restructure their payment period for up to 30 years.

After the debtor filed a petition for reconsideration, the bankruptcy court reversed its prior ruling. The bankruptcy court held that, because the debtor was only a co-signer, not the actual borrower, and the student loans were not government-issued, the debts were not eligible for an extension of the loan repayment period under federal regulations. The district court reviewed and affirmed the bankruptcy court’s decision and the creditor which had guaranteed the student loans filed an appeal in the Eleventh Circuit.

The Eleventh Circuit’s ruling

On appeal, the Eleventh Circuit upheld the district court’s decision. The circuit court held that the debtor satisfied the undue hardship requirements under the Bruner test. With regard to the second part of the Bruner test, the court found that the debtor’s state of affairs would persist for a significant portion of the repayment period since she was not eligible under federal law for the extended loan repayment period.

Individuals facing bankruptcy proceedings are urged to consult with a competent attorney experienced in these matters to ensure that their legal rights are protected.

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