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Can Student Loans be Discharged through Bankruptcy?


Are you faced with student loan debt? Are you looking for a way to get rid of this as soon as possible? Many people have questions regarding student loan debt and bankruptcy.

While not always the case, most people are unable to discharge student loan debt through either Chapter 7 or Chapter 13 bankruptcy.

Of course, there are exceptions to almost every rule. If you are able to prove that repaying your student loans would cause an unnecessary hardship, the court may allow you to discharge some or all of the debt.

There is nothing simple about this process, so it is important to learn as much as possible about how your bankruptcy filing will unfold. It is commonly believed that all debt, including student loans, will be discharged as a result of bankruptcy. If you believe this, you may be disappointed with the way things work out.

Undue Hardship

The only way to have student loans discharged in bankruptcy is if you are able to prove that continuing to pay would cause an undue financial hardship.

The test used to determine if you will be faced with an undue hardship differs from one state to the next.

Depending on the court, one of these two tests will be used:

  • Totality of the circumstances test
  • Brunner test

With both tests, you are required to meet the requirements that have been put into place. For instance, the requirements for the Brunner test are as follows:

  • Good faith. Have you tried to repay your student loans as required?
  • Ongoing financial difficulties. You must prove to the court that your current financial situation will continue into the future.
  • Poverty. Based on an analysis of your income and expenses, you are unable to maintain a minimal standard of living if you are required to continue repayment of your loans.

Dealing with Student Loans that are not Discharged

Since you will likely find that your student loans are not able to be discharged through bankruptcy, it is time to consider where this will put you:

  • Chapter 7 bankruptcy: if you are unable to prove undue hardship, once your bankruptcy case comes to an end you must resume paying your student loans as originally required.
  • Chapter 13 bankruptcy: with this type of filing, there is the possibility that you can completely stop payments on student loans while under the protection of a Chapter 13 repayment plan.

Can student loans be discharged through bankruptcy? The basic simple answer is no and as you can see there are serious challenges associated with discharging student loans and it is really quite difficult to fully discharge a student loan. Contact a knowledgeable bankruptcy attorney to guide you through the process.

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