Can student loans be discharged in bankruptcy?

The answer to “Can a student loan be discharged in bankruptcy?” is “Yes!”  The answer to “Will a student loan be discharged in bankruptcy/” is “Maybe…” but it will not come without a fight. Attempting to discharge a student loan is a far more complex matter than just a simple, straightforward bankruptcy.

It is highly suggested that it not be attempted without the guidance of an experienced, knowledgeable attorney, as it requires an additional Federal court filing.

When a debtor has filed bankruptcy and is requesting the discharge of a student loan, he will be required to file another pleading within that bankruptcy known as an adversary proceeding.  This filing will include the request of discharge of a debt that is normally non-dischargeable.  It must specifically show that being forced to pay the loan back would cause the debtor undue hardship. This is demonstrated by a test known as the Brunner test.

The Brunner test is used by the court to determine three key issues.  First, that if forced to repay a student loan, the debtor could not maintain a reasonable standard of living. Second, that there are some set of extenuating circumstances that have happened, and will continue to happen for the life of the loan, that will prevent the debtor from being able to make those payments.  Third, that the debtor has already made every effort to pay the loan back in good faith.  These efforts must be verifiable, meaning that a verbal statement of such is not sufficient proof. Payment efforts must be documented.

The success rate of obtaining a student loan discharge within a bankruptcy is often low, and obtaining a discharge without the help of a skilled attorney is almost non-existent.  Adversary proceedings are complex, difficult matters to navigate.  If you feel that you may qualify for student loan discharge, consult with a bankruptcy attorney to determine your best route.