Help Center

Annual Spring Meeting | April 23-25 | Washington, DC Register Today View Schedule

Debtor Must Minimize Expenses and Maximize Income to Pass First Prong of Brunner Test

By: Samantha Alfano

St. John’s University School of Law

American Bankruptcy Institute Law Review Staff Member

          Under title 11 of the United States (the “Bankruptcy Code”), student debt is generally not dischargeable unless the debtor can show undue hardship.  In determining undue hardship, courts have adopted certain tests.[1]  In In re Murrell the United States Bankruptcy Court for the Northern District of Ohio denied a student loan discharge because the debtor did not qualify as having undue hardship by applying the “minimal standard of living” test, as set out by the Second Circuit in the case of Brunner v. New York State Higher Educ. Servs. Corp (the “Brunner test”).[2] In 2000, Calvin Murrell, (the “Debtor”), stopped working because of knee and back injuries.[3] While unemployed, the Debtor attended three colleges and accumulated $72,940.82 worth of student loan debt.[4] The Debtor received Social Security Disability which, when combined with his co-debtor wife’s income, totaled an adjusted gross income of $32,893 in 2017.[5] The Debtor had monthly expenses for DirectTV, internet and phone services, in the amount of $290-$550 a month.[6] Based on these non-essential utility expenses, the Court concluded that the Debtor failed the Brunner test.  According to the court, the debtor could not discharge his student loan debt in bankruptcy and maintain these luxuries. Instead, the debtor was required to maintain a “minimal standard of living.”[7] The Court explained that a minimal standard of living can include modest recreational expenses, but there is a limit on these expenses, which the Debtor exceeded. [8]

          11 U.S.C. § 523(a)(8) permits the discharge of a student loan obligation if “excepting such debt from discharge will impose an undue hardship on the debtor and the debtor’s dependents.”[9] The Second Circuit formed a three-prong test for “undue hardship” in the case of Brunner v. New York.[10] This test requires the debtor to prove each of the following elements by a preponderance of the evidence: (1) that the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for himself and his dependents if forced to repay the loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) that the debtor has made good faith efforts to repay the loans.[11] The Brunner test is not a mere reasonableness standard, it is much more stringent. [12] Therefore, the debtor’s lifestyle, with a specific focus on expenses, is put under rigid scrutiny by the court, to decide whether or not the debtor could make adjustments to his expenses in order to pay at least some of his student loan obligations. [13]

          In Murrell, the Ohio Bankruptcy Court applied the Brunner test, but focused entirely on the first element and analyzed exactly what constitutes a “minimal standard of living.”[14] “A minimal standard of living includes expenses for basic necessities such as food, shelter, clothing and medical treatment.”[15] Total household income must also be taken into consideration in the minimal standard of living analysis.[16] The Ohio Bankruptcy Court concluded that a minimal standard of living under the Brunner test does not include the payment of $290-$550 a month in nonessential expenses, such as DirectTV, internet and phone services. [17] Although the court accepted the fact that a minimal standard of living can include modest recreation expenses, there is a limit on these expenses. [18] The court emphasized the flexibility that is evident in the Debtor’s income that could be used to make payments on his student loans.[19] Applying the stringent standard of Brunner, the court decided that even though television, internet and phone expenses do not indicate “an unreasonable standard of living”, they exceed the “minimum” necessary expenses allowed under the test. [20]

          Courts have held that “while the debtor need not live in abject poverty to satisfy the first Brunner prong, a debtor must make a significant effort to ‘live within the strictures of a frugal budget for the foreseeable future.’”[21] Additionally, courts have held that “minimal standard” is not the same as “pre-existing”, meaning the quality of life the debtor has been living,  or “comfortable,” but also not “reduced to poverty.”[22] Thus, in denying the Debtor’s discharge of his student loans, the Ohio bankruptcy court followed previous court decisions and reinforced the strict Brunner standard.[23]



[1] Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395, 396 (2d Cir. 1987).

[2] See In re Murrell, No. 17-33088, 2019 Bankr. LEXIS 2669, at *16 (Bankr. N.D. Ohio, Mar. 29, 2019).

[3] Id. at *3-4.

[4] Id. at *4.

[5] Id. at *5.

[6] Id.

[7] Id. at *14.

[8] Id. at *11.

[9] 11 U.S.C §523(a)(8).

[10] Brunner, 831 F.2d at 396.

[11] Id.

[12] In re Murrell, 2019 Bankr. LEXIS 2669, at *13

[13] Id. at *10-12 (“A debtor seeking discharge of his loans is expected to maximize income and minimize expenses.”).

[14] Id. at * 9-10 (explaining that because the defendant prevailed on the first element the court did not need to address the other two Brunner elements).

[15] Id. at *10-11.

[16] In re Davis, 373 B.R. 241, 248 (W.D.N.Y. 2007). Being above the poverty line for a family of two is not a dispositive factor for minimal standard of living but is a factor the weighs against the debtor in an undue hardship argument. See In re Murrell, 2019 Bankr. LEXIS 2669, at *11.

[17] Id. at *13.

[18] Id.

[19] Id. (emphasizing that the Debtor qualifies for monthly student loan payments between $63-$94 under an income-based plan).

[20] Id. at *13-14 (“These expenses indicate that Plaintiff could engage in belt-tightening regarding ‘recreation’ expenses.”).

[21] Id. at *11 (citing In re Larson, 426 B.R. 782, 789 (Bankr. N.D. III. 2010)).

[22] See In re Nixon, 453 B.R. 311, 327 (Bankr. S.D. Ohio 2011).

[23] In re Murrell, 2019 Bankr. LEXIS 2669, at *13-14.