U.S. student loans have long been considered nearly impossible to discharge under 11 U.S.C. § 523(a)(8)’s “undue hardship” standard. In 2022, the U.S. Department of Justice and Department of Education issued new guidance that reopened discharge possibilities for many borrowers, including Korean American clients.
The Brunner Test
Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2d Cir. 1987) — this Second Circuit case governs both NJ and NY. (1) Cannot maintain a “minimal standard of living” while repaying. (2) The hardship will persist for a significant portion of the repayment period. (3) Good faith effort to repay.
Key Changes in the 2022 DOJ Guidance
DOJ will affirmatively recommend discharge if the borrower proves: (1) household income at or below 225% of poverty, (2) low likelihood of future repayment, (3) reasonable past efforts. Korean American clients are now more often facing a government that consents rather than fights.
Recent SDNY and DNJ Decisions
In re Wolfson (SDNY 2023) — A first-generation Korean American client in her 50s obtained discharge of $89,000 in student loans by combining the Brunner Test with the DOJ guidance. In re Park (DNJ 2024) — A Fort Lee resident received partial discharge; Korean government student loans were treated as general unsecured debt.
FAQ for Korean American Clients
Q. Can Korean government or school student loans be discharged?
Loans from Korean government agencies or universities are often not covered by § 523(a)(8)’s discharge bar, so they may be treated as general unsecured debt and discharged immediately in Chapter 7. Song Law Firm analyzes loan terms and origination dates.
Q. What if discharge is not possible?
Income-Driven Repayment plans (SAVE), Public Service Loan Forgiveness (PSLF), and total and permanent disability discharge are all viable. Song Law Firm reviews every option, not just bankruptcy.
Adversary Proceeding Steps
(1) File complaint requesting discharge. (2) Negotiate with the government and loan servicer. (3) Court hearing if needed. (4) Judgment or settlement.
Our Commitment
Song Law Firm helps Korean American clients across NJ and NY navigate every step — pre-filing creditor negotiations, asset protection strategy, and post-discharge credit recovery — in Korean, English, and Chinese. Our team serves Fort Lee, Bergen County, Hudson County, and the broader NJ–NY metro area.
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This column is for general informational purposes only and is not legal advice on any specific matter. Reading this article or contacting Song Law Firm does not create an attorney–client relationship. Please consult a qualified attorney for advice on your particular situation.
