Student Loans §523(a)( 8 ) Undue Hardship Discharge Affidavit

 

If you decide to file an adversary proceeding to discharge under §523(a)(8) your student loans based on undue hardship, you'll have to fill out this affidavit from the Department of education. The Department will use this to determine if they stipulate that you are entitled to a discharge.

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What this affidavit is for

The Department of Education has released an affidavit that will be required from every Federal student loan debtor who seeks to discharge their government student loan in bankruptcy on grounds of "undue hardship" under  11 U.S.C § 523(a)(8) of the bankruptcy code.

Under new guidelines (issued by the Department of Education to its debt-collection attorneys), If a debtor in bankruptcy seeks an "undue hardship" discharge, the Department of Education will ask the debtor to complete this affidavit.

Try our new Alpha version 
Free Online Student Loan Affidavit

We've been playing with documate.org, and have come up with this useful tool for those considering whether bankruptcy may be an answer to their student loan problems.

What it covers

The affidavit covers the following: 

Why it matters

If the answers you give in the affidavit meet specific criteria, the Department of Education's lawyers are advised to stipulate that your student loan deserves a discharge under the undue hardship standard. 

Ultimately it will be up to the bankruptcy court judge to determine whether the discharge is granted.

The "stipulation" means that the lawyers for the creditors agree with you that your hardship qualifies for a discharge under § 523(a)(8).

Like the means test, but more...

The first part of the affidavit is much like the means test form in that it asks for income information and then a breakdown of monthly expenses and compares them to IRS collection standards, much like the means test does.

But then it adds two additional elements, concerning:

  • evidence that you made "good faith efforts" to repay the loan in the past, and
  • your inability to be able to repay in the future. 

An effort to bring predictability to a previously unpredictable standard

This new affidavit aims to remove some of the randomnesses from the application of the Brunner test in determining whether a debtor's hardship is sufficient to warrant a discharge. 

This affidavit sets a standard (based on IRS standards) to create a presumption that a case meets the criteria of the Brunner test and qualifies for a hardship discharge under 11 U.S.C § 523(a)(8).

Adopting the IRS standards as a benchmark is a significant shift in this area. It means that the Department's lawyers are willing to go along with the far more generous application of the Brunner test standards, compared to the positions they have traditionally taken, in opposing student loan discharges under 523(a)(8).

Online calculator pre-release...

LegalConsumer released a "student loan undue hardship calculator" in January of 2023 to help with some of the mechanical parts of this form/affidavit.

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What follows is the text from the PDF of the affidavit that the justice department plans to use.

Sources: From the Department of Justice (www.justice.gov)

GUIDANCE FOR DEPARTMENT ATTORNEYS REGARDING STUDENT LOAN BANKRUPTCY LITIGATION (November 17, 2022)

Student Loan Discharge Guidance -- Attestation Form [Updated Augist 2023]

Table of Contents

I. PERSONAL INFORMATION

II. CURRENT INCOME AND EXPENSES

III. FUTURE INABILITY TO REPAY STUDENT LOANS

IV. PRIOR EFFORTS TO REPAY LOANS

V. CURRENT ASSETS

VI. ADDITIONAL CIRCUMSTANCES

 

ATTESTATION OF [NAME] IN SUPPORT OF REQUEST FOR STIPULATION CONCEDING DISCHARGEABILITY OF STUDENT LOANS

I, [ NAME ], make this Attestation in support of my claim that excepting the student loans described herein from discharge would cause an “undue hardship” to myself and my dependents within the meaning of 11 U.S.C. §523(a)(8). In support of this Attestation, I state the following under penalty of perjury:

I. PERSONAL INFORMATION

1. I am over the age of eighteen and am competent to make this Attestation.

2. I reside at _________________ [address], in ____________ County, [State].

3. My household includes the following persons (including myself):

_____________ [full name] ______[age] ____________[self]

_____________ [full name] ______[age] ____________[relationship]

_____________ [full name] ______[age] ____________[relationship]

Questions four through nine request information related to your outstanding student loan debt and your educational history. The Department of Education will furnish this information to the Assistant United States Attorney (“AUSA”) handling your case, and it should be provided to you. If you agree that the information provided to you regarding your student loan debt and educational history is accurate, you may simply confirm that you agree, and these questions do not need to be completed. If you have not received the information from Education or the AUSA at the time you are completing this form, or if the information is not accurate, you may answer these questions based upon your own knowledge. If you have more than one student loan which you are seeking to discharge in this adversary proceeding, please confirm that the AUSA has complete and accurate information for each loan, or provide that information for each loan.

4. I confirm that the student loan information and educational history provided to me and attached to this Attestation is correct: YES / NO [If you answered “NO,” you must answer questions five through nine].

5. The outstanding balance of the student loan[s] I am seeking to discharge in this adversary proceeding is $______________.

6. The current monthly payment on such loan[s] is _________________. The loan[s] are scheduled to be repaid in ___________________ [month and year] [OR] ____ My student loan[s] went into default in __________ [month and year].

7. I incurred the student loan[s] I am seeking to discharge while attending _______________________, where I was pursuing a ____________ degree with a specialization in __________________.

8. In _______________ [month and year], I completed my course of study and received a __________________ degree [OR] In _______________ [month and year], I left my course of study and did not receive a degree.

9. I am currently employed as a ____________________. My employer’s name and address is __________________________ [OR] ______ I am not currently employed.

II. CURRENT INCOME AND EXPENSES

10. I do not have the ability to make payments on my student loans while maintaining a minimal standard of living for myself and my household. I submit the following information to demonstrate this:

A. Household Gross Income

11. My current monthly household gross income from all sources is $___________.fn1

fn1. 1 “Gross income” means your income before any payroll deductions (for taxes, Social Security, health insurance, etc.) or deductions from other sources of income. You may have included information about your gross income on documents previously filed in your bankruptcy case , including Form B 106I, Schedule I - Your Income (Schedule I). If you filed your Schedule I within the past 18 months and the income information on those documents has not changed, you may refer to that document for the income information provided here. If you filed Schedule I more than 18 months prior to this Attestation, or your income has changed, you should provide your new income information. 

This amount includes the following monthly amounts:

___________ my gross income from employment (if any)

___________ my unemployment benefits

___________ my Social Security Benefits

___________ my _____________

___________ my _____________

___________ my _____________

___________ gross income from employment of other members of household

___________ unemployment benefits received by other members of household

___________ Social Security benefits received by other members of household

___________ other income from any source received by other members of household

12. The current monthly household gross income stated above (select which applies):

______ Includes a monthly average of the gross income shown on the most recent tax return[s] filed for myself and other members of my household, which are attached, and the amounts stated on such tax returns have not changed materially since the tax year of such returns; OR

______ Represents an average amount calculated from the most recent two months of gross income stated on four (4) consecutive paystubs from my current employment, which are attached; OR

______ My current monthly household gross income is not accurately reflected on either recent tax returns or paystubs from current employment, and I have submitted instead the following documents verifying current gross household income from employment of household members:

__________________________________________________________

13. In addition, I have submitted ______________________ verifying the sources of income other than income from employment, as such income is not shown on [most recent tax return[s] or paystubs].

B. Monthly Expenses

14. My current monthly household expenses do not exceed the amounts listed below based on the number of people in my household for the following categories [Indicate “yes” if your expenses do not exceed the referenced amounts]:

(a) Living Expenses [fn2]

fn2. The living expenses listed in Question 14 and 15 have been adopted from the Internal Revenue Service Collection Financial Standards “National Standards” and “Local Standards” for the year in which this form is issued. This form is updated annually to reflect changes to these expenses.

i. Food YES / NO
$431 (one person)
$779 (two persons)
$903 (three persons)
$1028 (four persons)

ii. Housekeeping supplies YES / NO
$40 (one person)
$82 (two persons)
$74 (three persons)
$85 (four persons)

iii. Apparel & Services YES / NO
$99 (one person)
$161(two persons)
$206 (three persons)
$279 (four persons)

iv. Personal care products and services YES / NO
(non-medical)
$45 (one person)
$82 (two persons)
$78 (three persons)
$96 (four persons)

v. Uninsured medical costs YES / NO
$75 (per individual under 65)
$153 (per individual over 65)

vi. Miscellaneous expenses YES / NO
not included elsewhere on this Attestation:
$170 (one person)
$306 (two persons)
$349 (three persons)
$412 (four persons)

(b) Households Greater Than Four Persons

If your household consists of more than four people, please provide your total expenses for the categories in Question 14(a): $__________

[If you filed a Form 122A-2 Chapter 7 Means Test or 122C-2 Calculation of Disposable Income in your bankruptcy case, you may refer to lines 6 and 7 of those forms for information.[fn3] ] 

fn3. 3 Forms 122A-2 and 122C-2 are referred to collectively here as the “Means Test.” If you filed a Means Test in your bankruptcy case, you may refer to it for information requested here and in other expense categories below. If you did not file a Means Test, you may refer to your Schedule 

(c) Excess Expenses

If your current monthly household expenses exceed the amounts listed above for any of the categories in Question 13(a) and you would like the AUSA to consider such additional expenses as necessary, you may list those expenses and explain the need for such expenses here.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

15. My current monthly household expenses in the following categories are as follows:

(a) Payroll Deductions

i. Taxes, Medicare and Social Security $____________
[You may refer to line 16 of the Means Test or Schedule I, line 5]

ii. Contributions to retirement accounts $____________
[You may refer to line 17 of the Means Test or Schedule I, line 5] Are these contributions required as a condition of your employment? YES / NO

iii. Union dues $____________
[You may refer to line 17 of the Means Test or Schedule I, line 5]

iv. Life insurance $____________
[You may refer to line 18 of the Means Test or Schedule I, line 5]

Are the payments for a term policy YES / NO
covering your life?

v. Court-ordered alimony and child support $____________
[You may refer to line 19 of the Means Test or Schedule I, line 5]

I and Form 106J – Your Expenses (Schedule J) in the bankruptcy case, which may also list information relevant to these categories. You should only use information from these documents if your expenses have not changed since you filed them.

vi. Health insurance $____________
[You may refer to line 25 of the Means Test or Schedule I, line 5]

Does the policy cover any persons other than yourself and your family members? YES / NO

vii. Other payroll deductions
_____________________ $____________
_____________________ $____________
_____________________ $____________

(d) Housing Costs[fn4]

fn4. You should list the expenses you actually pay in Housing Costs and Transportation Costs categories. If these expenses have not changed since you filed your Schedule J, you may refer to the expenses listed there, including housing expenses (generally on lines 4 through 6 of Schedule J) and transportation expenses (generally on lines 12, 15c and 17).

i. Mortgage or rent payments $____________

ii. Property taxes (if paid separately) $____________

iii. Homeowners or renters insurance $____________ (if paid separately)

iv. Home maintenance and repair $____________ (average last 12 months’ amounts)

v. Utilities (include monthly gas, electric $____________
water, heating oil, garbage collection, residential telephone service, cell phone service, cable television, and internet service)

(e) Transportation Costs

i. Vehicle payments (itemize per vehicle) $____________

ii. Monthly average costs of operating vehicles $____________
(including gas, routine maintenance, monthly insurance cost)

iii. Public transportation costs $____________

(f) Other Necessary Expenses

i. Court-ordered alimony and child support payments $____________
(if not deducted from pay)
[You may refer to line 19 of Form 122A-2 or 122C-2 or Schedule J, line 18]

ii. Babysitting, day care, nursery and preschool costs $____________
[You may refer to line 21 of Form 122A-2 or 122C-2 or Schedule J, line 8] [fn5]

fn5. Line 8 of Schedule J allows listing of expenses for “childcare and children’s education costs.” You should not list any educational expenses for your children here, aside from necessary nursery or preschool costs.

Explain the circumstances making it necessary for you to expend this amount:

_____________________________________
_____________________________________
_____________________________________
_____________________________________

iii. Health insurance $____________
(if not deducted from pay)
[You may refer to line 25 of the Means Test or Schedule J, line 15]

Does the policy cover any persons other than YES / NO
yourself and your family members?

iv. Life insurance $____________
(if not deducted from pay)
[You may refer to line 25 of the Means Test or Schedule J, line 15]

Are the payments for a term policy YES / NO
covering your life?

v. Dependent care (for elderly or disabled $____________
family members)
[You may refer to line 26 of the Means Test or Schedule J, line 19]

Explain the circumstances making it necessary for you to expend this amount:
_____________________________________
_____________________________________
_____________________________________
_____________________________________

vi. Payments on delinquent federal, state or local tax debt $____________
[You may refer to line 35 of the Means Test or Schedule J, line 17]

Are these payments being made pursuant YES / NO
to an agreement with the taxing authority?

vii. Payments on other student loans $____________
I am not seeking to discharge

viii. Other expenses I believe necessary for $____________
a minimal standard of living.

Explain the circumstances making it necessary for you to expend this amount:

_____________________________________
_____________________________________
_____________________________________
_____________________________________

16. After deducting the foregoing monthly expenses from my household gross income, I have _______ [no, or amount] remaining income.

17. In addition to the foregoing expenses, I anticipate I will incur additional monthly expenses in the future for my, and my dependents’, basic needs that are currently not met. [fn6] These include the following:

___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________

fn6. If you have forgone expenses for any basic needs and anticipate that you will incur such expenses in the future, you may list them here and explain the circumstances making it necessary for you to incur such expenses.

III. FUTURE INABILITY TO REPAY STUDENT LOANS

18. For the following reasons, it should be presumed that my financial circumstances are unlikely to materially improve over a significant portion of the repayment period (answer all that apply):

___ I am over the age of 65.

___ The student loans I am seeking to discharge have been in repayment status for at least 10 years (excluding any period during which I was enrolled as a student).

___ I did not complete the education for which I incurred the student loan[s].

___ I have a permanent disability or chronic injury which renders me unable to work or limits my ability to work.

Describe the disability or injury and its effects on your ability to work, and indicate whether you receive any governmental benefits attributable to this disability or injury:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________

___ I have been unemployed for at least five of the past ten years.

Please explain your efforts to obtain employment.
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________

19. For the following additional reasons, my financial circumstances are unlikely to materially improve over a significant portion of the repayment period (answer all that apply):

___ I incurred student loans I am seeking to discharge in pursuit of a degree I was unable to complete for reasons other than the closure of the educational institution.

Describe your reasons for being unable to complete the degree:
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________

___ I am not currently employed.

___ I am currently employed, but I am unable to obtain employment in the field for which I am educated or have received specialized training.

Describe reasons for inability to obtain such employment, and indicate if you have ever been able to obtain such employment:
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________

___ I am currently employed, but my income is insufficient to pay my loans and unlikely to increase to an amount necessary to make substantial payments on the student loans I am seeking to discharge.

Please explain why you believe this is so:
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________

___ Other circumstances exist making it unlikely I will be able to make payments for a significant part of the repayment period.

Explain these circumstances: ______________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________

IV. PRIOR EFFORTS TO REPAY LOANS

20. I have made good faith efforts to repay the student loans at issue in this proceeding, including the following efforts:

21. Since receiving the student loans at issue, I have made a total of $________ in payments on the loans, including the following:

___ regular monthly payments of $______ each.

___ additional payments, including $________, $________, and $________.

22. I have received ____ forbearances or deferments, for a period totaling ___ months.

23. I have attempted to contact the company that services or collects on my student loans or the Department of Education at least times.

24. I have sought to enroll in one or more “Income Deferred Repayment Programs” or similar repayment programs offered by the Department of Education, including the following:

Description of efforts:

______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________

25. [If you did not enroll in such a program]. I have not enrolled in an “Income Deferred Repayment Program” or similar repayment program offered by the Department of Education for the following reasons:

______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________

26. Describe any other facts indicating you have acted in good faith in the past in attempting to repay the loan, including efforts to obtain employment, maximize your income, or minimize your expenses:
_____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
___________________________________________________________________
___________________________________________________________________
____________________________________________________________________

V. CURRENT ASSETS

27. I own the following parcels of real estate:

Address:
_________________________
_________________________
_________________________

Owners:[fn7]
_________________________
_________________________

fn7.List by name all owners of record (self and spouse, for example)

Fair market value: _________________________

Total balance of _________________________
mortgages and other liens.

28. I own the following motor vehicles:

Make and model: _________________________

Fair market value: _________________________

Total balance of _________________________
Vehicle loans
And other liens

29. I hold a total of ____________________ in retirement assets, held in 401k, IRA and similar retirement accounts.

30. I own the following interests in a corporation, limited liability company, partnership, or other entity:

Name of entity State incorporated[fn8] Type[fn9] and %age Interest
______________________    _________________    ________________
______________________    _________________    ________________
______________________    _________________    ________________

fn8. The state, if any, in which the entity is incorporated. Partnerships, joint ventures and some other business entities might not be incorporated.

fn9. For example, shares, membership interest, partnership interest.

31. I currently am anticipating receiving a tax refund totaling $________.

VI. ADDITIONAL CIRCUMSTANCES

32. I submit the following circumstances as additional support for my effort to discharge my student loans as an “undue hardship” under 11 U.S.C. §523(a)(8): 

______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________

Pursuant to 28 U.S.C. § 1746, I declare under penalty of perjury that the foregoing is true and correct.

___________________________
Signature:

___________________________
Name:

___________________________
Date:


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Jurisdictional relevance: US

Legal Consumer - Wasatch County, UTLaw. The content of this article pertains to all US states and counties.