Opinion ID: 710042
Heading Depth: 3
Heading Rank: 1

Heading: The Johnson Test

Text: 30 The tripartite Johnson test was set forth by the Bankruptcy Court for the Eastern District of Pennsylvania in In re Johnson, 5 Bankr.Ct.Dec. at 532. The Johnson test provides as follows: 31 In determining whether the undue hardship exception entitles a specific debtor to discharge of his student loan, a court should rely on three tests: 32 (1) Mechanical Test: The court must ask: Will the debtor's future financial resources for the longest foreseeable period of time allowed for repayment of the loan, be sufficient to support the debtor and his dependents at a subsistence or poverty standard of living, as well as to fund repayment of the student loan? If the question is answered affirmatively, discharge of the student loan must be denied. If answered negatively, then the court must apply the good faith test: 33 (2) Good Faith Test: Here, the court asks two questions: 34 (a) Was the debtor negligent or irresponsible in his efforts to minimize expenses, maximize resources, or secure employment? 35 (b) If yes, then would lack of such negligence or irresponsibility have altered the answer to the mechanical test? 36 If the answer to the first part of the good faith test is no, then the debtor should be discharged of the obligation to repay his student loan. However, if the answers to both parts of the good faith test are yes, then a presumption against discharge is established--which may be rebutted by a negative answer to the third and final test. 37 (3) ... Policy Test: The court must ask: Do the circumstances--i.e., the amount and percentage of total indebtedness of the student loan and the employment prospects of the petitioner indicate: 38 (a) That the dominant purpose of the bankruptcy petition was to discharge the student debt, or 39 (b) That the debtor has definitely benefitted financially from the education which the loan helped to finance? 40 If the answer to both parts of this question is a firm no, then the debtor should be discharged from his student loan obligation. If the court answers yes to either part of the question, then discharge should be denied. 41 Id. at 544. 42 Johnson 's tripartite analysis appears to be both unnecessarily complicated and unduly cumbersome. When Johnson is applied correctly, however, most petitions will be denied after the mechanical test is applied. Thus, in this sense, the Johnson test is in accord with our recognition of the Congressional objectives of preventing abuse of the bankruptcy process and protecting the financial integrity of the student loan program. Pelkowski, 990 F.2d at 743-44. Similarly, both the good faith and policy tests provide additional protection against abuse of the student loan program. The Johnson test, by its terms, contains no provision that would permit bankruptcy courts to negate a finding of nondischargeability based upon an assessment of other equitable considerations that may be deemed to be relevant.