Business Law

In re Love, 649 B.R. 556 (Bankr. E.D. Cal. 2023)

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The following is a case update written by Isabelle Cho, Summer Associate at Danning, Gill, Israel & Krasnoff, LLP, analyzing a recent case of interest, In re Love, 649 B.R. 556, 560 (Bankr. E.D. Cal. 2023). 


A bankruptcy court for the Eastern District of California, Hon. Christopher M. Klein, held that the student loan liability of a Chapter 7 debtor is discharged after satisfying, by the requisite preponderance of evidence standard, all three elements of the Brunner-Pena test for establishing undue hardship. The Court also analyzed the differing approaches of the Ninth and Second Circuits in interpreting the test. Importantly, the Court cited the Supreme Court case U.S. Bank Nat’l Ass’n v. Village at Lakeridge, 138 S. Ct. 960 (2018), to highlight that the division of roles between trial and appellate courts depend on the nature of the “mixed question” of law and fact. Applying the principles of Lakeridge, the Court determined that since evaluating undue hardship related to student loan debt involves a fact-based inquiry, appellate courts should apply a “clear error” standard instead of a de novo review. In re Love, 649 B.R. 556 (Bankr. E.D. Cal. 2023).

To read the full published decision: click here.


Chapter 7 debtor, Christine Love (the “Debtor”), owed the United States Department of Education (“Education”) about $27,270 for student loans. These loans were incurred while studying at the now-defunct Ashford University, which did not lead to a discernible improvement in the Debtor’s employment prospect. Additionally, the Debtor potentially faced liability for an additional $57,697 in student loans incurred by her former spouse, who was convicted and incarcerated for abusing the Debtor. The Debtor, with two minor children, experienced monthly expenses that exceeded her monthly income. Despite these circumstances, the Debtor had a diligent work history spanning over 20 years, had never defaulted on student loans, made voluntary additional payments, and received assistance from the state program to help with her mortgage. The Debtor sought the discharge of all her student loan liabilities. 


Judge Klein begins his opinion by dispelling the widespread misconception that student loan debt is virtually impossible to discharge. In re Love, 649 B.R. at 560. The Court explains that the Ninth Circuit utilizes the three-part Brunner test, adopted from the Second Circuit, to assess the issue of “undue hardship” in student loan cases. Id. at 562. The Court closely examines two cases that applied the same test but reached opposing conclusions: In re Brunner, 831 F.2d 395 (2d Cir. 1987) and United Student Aid Funds, Inc. v. Pena, 155 F.3d 1108 (9th Cir. 1998). The first step of the Brunner test requires demonstrating that the debtor “cannot maintain, based on current income and expenses, a ‘minimal’ standard of living for [self] and dependents if it is forced to repay the loans.” In re Love, 649 B.R. at 562. The Ninth Circuit in Pena permitted the averaging of fluctuating income figures without being obligated to solely consider the circumstances on the day of trial. Id. at 563. The Debtor did not bring up the issue of fluctuating income, but because she worked full time and opportunities for overtime work were “too infrequent to be deemed material”, the Court ruled that the Debtor satisfied the first element of the test. Id. at 568. The second step requires the Debtor to show 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.” Id. The Ninth Circuit in Pena identified the low value of education provided as a relevant factor in determining the student’s future ability to pay off the loans. Id. at 564. Because Ashford was no longer an operating entity, there is no realistic opportunity for the Debtor to resume her education and have opportunities for promotion upon completion. Id at 569. Lastly, the Debtor must have “made good faith efforts to repay the loans.” Id. The Ninth Circuit in Pena saw no clear error in finding good faith as the debtor had made several payments. Id. at 564. Likewise, the Debtor acted in good faith by making voluntary additional payments postpetition and seeking administrative relief. Id. at 569. 

In evaluating the Brunner test, the Court adopts the reasoning of Lakeridge, a Supreme Court case, to highlight that the standard of review for a mixed question depends on “whether answering it entails primarily legal or factual work.” Id. at 567. Lakeridge states that if a mixed question requires courts to expound, amplify, and elaborate on a broad legal standard and develop auxiliary legal principles, a de novo review is appropriate. Id. at 566. On the other hand, if a mixed question compels courts to evaluate case-specific factual issues that are “multifarious, fleeting, special and narrow”, then appellate courts should review the decision with deference and adopt a “clear error” standard of review. Id. The Court concludes that because the mixed question a bankruptcy court address in an “undue hardship” discharge case requires case-specific factual analysis to make a determination, appellate courts should adopt the “clear error” standard of review” and not substitute their judgment for that of the bankruptcy court in such matters. Id. at 567.

Author’s Comments

The opinion is fascinating in multiple respects. First, the bankruptcy court’s interpretation of the Brunner test could offer greater flexibility and leniency for student loan debtors seeking discharge. Specifically, the court rejected the argument that “current income” refers solely to the debtor’s income at the time of trial, instead allowing the averaging of figures over a reasonable period. Fixing the income amount to the day of trial poses challenges for many student loan debtors, especially those who work multiple low-paying jobs and receive hourly wages instead of a salary, in demonstrating a prolonged inability to repay loans. The same applies to fixing the expense amount to the day of trial, as debtors may have significant expenses that may not be adequately represented by a single snapshot on that day. Allowing the averaging of income and expense figures empowers debtors to provide a more accurate representation of their financial situations. 

Second, the bankruptcy court dismissed the argument that expert corroboration was necessary to establish the debtor’s medical condition. The court reasoned that the trial court was entitled to rely on the debtor’s testimony, supported by disability awards and the receipt of disability payments. The relaxed standard not only eases the burden of proof for debtors with medical conditions but also streamlines the bankruptcy process and promotes procedural efficiency. 

Finally, the bankruptcy court ruled that the low value of education was a relevant factor in determining inability to repay. This becomes evident when the debtor’s university is defunct as in the present case, making upward career progression practically unattainable. However, an intriguing question arises as to how courts can accurately assess the value of education. Even if debtors possess certificates from prestigious universities, isn’t the value of education heavily influenced by external factors such as market conditions? While the decision is generally encouraging for student loan debtors, there is room for debate on whether the factual basis provided offers sufficient clarity for debtors seeking discharge. Naturally, decisions of a qualitative nature like these do not demand mathematical precision. Nonetheless, without clear guidance on what factor is fatal to the discharge and what is not, trial courts may encounter difficulties applying the Brunner test to novel circumstances. Given that the appellate courts should be confined to reviewing student loan cases under a clear error standard, trial courts must bear the additional burden of verifying intricate facts and ensuring a thorough understanding of the debtor’s unique circumstances absent in the precedents.

In my humble opinion, an ideal approach would be to retain the fundamental structure of the Brunner test while giving greater consideration to the totality of circumstances to address contemporary challenges of student loan debt. While deference to precedents is valuable to promote consistency, it is important to recognize that the student loan landscape has evolved significantly over the past decades. The simultaneous rise of cost and value of higher education, increased reliance on student loans, strict loan forgiveness policies, and the complexities associated with loan servicers create new hurdles for today’s debtors. Consequently, a well-defined expansion of the Brunner test is necessary to provide a more comprehensive assessment of a debtor’s ability to repay their student loans in light of the present realities. Pertinent factors include, but are not limited to, employment prospects in the debtor’s field of study, the ratio of employed individuals in that field, and access to financial management resources. 

These materials were written by Isabelle Cho, a Summer Associate at Danning, Gill, Israel & Krasnoff, LLP, in Los Angeles, California (  Ms. Cho is a student at UCLA School of Law, Class of 2024 (  Editorial contributions were provided by ILC Co-Chair, Aaron E. de Leest, Senior Counsel at Danning, Gill, Israel & Krasnoff, LLP, in Los Angeles, California (

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