Can Student Loans Be Discharged?

You usually can’t wipe out student loans through bankruptcy unless you can show that paying them back would cause you and your dependents serious hardship. Section 523 of the Bankruptcy Code applies to individual bankruptcy cases under Chapters 7, 11, 12, and 13. It’s up to you to prove that hardship exists, and you need to provide enough evidence to support your case.

To figure out if you're facing "undue hardship," courts use different tests. The most common one is called the Brunner test, which has three requirements: (1) you can’t keep a basic standard of living for yourself and your dependents if you have to pay back the loans; (2) there are ongoing circumstances that will likely keep you in this situation for a long time; and (3) you’ve made genuine efforts to pay back your loans. Many courts, including those in the Second to Tenth Circuits, use this test.

On the flip side, the Eighth Circuit uses a different approach called the "totality of the circumstances" test. This looks at your entire financial picture, including your past, present, and reasonably expected future finances, your necessary living expenses, and any other relevant information. This method is a bit more flexible than the Brunner test.

Some courts also allow for the possibility of partially discharging student loans under § 105 if full repayment would cause undue hardship, but this isn’t a standard rule and depends on where you are.

It’s important to know that the ability to discharge student loans is "self-executing." This means that if you don’t start a legal process and get a court to confirm that you’re facing undue hardship, your loans will stay non-dischargeable.Here's where you can enter in text. Feel free to edit, move, delete or add a different page element.

If you think that you can prove that repaying your student loans would result in a hardship to you or your family and want to discharge your student loans, contact our office to discuss how we can help you.