Can Bankruptcy Discharge Student Loans?

Student loans typically are not dischargeable under bankruptcy law. That said, there are narrow exceptions.

Even when student loans are found dischargeable under these narrow circumstances, it’s a challenge for a bankruptcy filing to discharge all student debt. Generally speaking, it’s not possible, unless the student can prove an “undue hardship.”

Proving You Have an Undue Hardship

The definition of undue hardship may vary depending on who you ask, but many bankruptcy courts evaluate whether you have an undue hardship using the Brunner Test.

In the Brunner Test, the courts look at several different factors to determine whether you have an undue hardship, including:

• Would you be able to maintain a minimal standard of living if you had to repay the loan?
• Are the financial difficulties you face temporary, or are they expected to continue for several years?
• Have you made efforts to keep up with your payments before filing for bankruptcy? In other words, are you seeking a discharge in good faith?

Unfortunately, it is very difficult to convince a court that you have an undue hardship, but it is not impossible. If you’re over the age of 50, disabled, or you face significant financial difficulties, you may have a better shot at convincing the courts to discharge your student debt.

Alternatives to Student Loan Bankruptcy

An alternative to bankruptcy to solve your student debt problem is to focus on other forms of debt consolidation, which can help lighten the load. The issue is the fact that student loan offerings often come from the federal level. This is why in general student loan debt can’t be discharged through bankruptcy. But if you are drowning in student debt and are unsure where to turn, here is a short list of possible alternatives that may be able to help you in the long run

• TLFP - Teacher Loan Forgiveness Program. Under TLFP, if you teach full-time for five complete and consecutive academic years in a low-income school or educational service agency, among other qualifications, you may be eligible for forgiveness of up to $17,500 on your Direct Subsidized and Unsubsidized Loans and your Subsidized and Unsubsidized Federal Stafford Loans.
• PSLF - Public Service Loan Forgiveness. PSLF forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying public service employer.
• LRAP - Loan Repayment Assistance Program. LRAP helps colleges and universities enroll and retain students who may feel college is unaffordable, by resolving the fear of loans and student debt.

Can an Attorney Help Me Discharge Student Loans in Bankruptcy?

Unfortunately, the likelihood of your student loans being discharged in bankruptcy is low, barring certain circumstances. However, that does not mean that bankruptcy will not be of use to you. If you find yourself drowning in debts, including your student loan debt, bankruptcy can help you get rid of all of your other debts, leaving you more breathing room to get your student loans taken care of. Speak to a bankruptcy attorney today to discuss your options.