Discharging Student Loans in Bankruptcy

Aug 05

According to student loan expert Heather Jarvis, 7 out of 10 college graduates in 2012 will have an average student loan debt of $29,400. That’s about 37 million student loan borrowers for a total of $1 trillion in outstanding debt to federal, state, and private lenders. Typically, student loan should be repaid with interest within 10 years after graduation which can significantly impact on a person’s income, more so when it gets to the point when filing for bankruptcy is the best option for managing debt.

Filing for Chapter 7 bankruptcy can eliminate most unsecured debts and provide relief through more favorable debt payment options under Chapter 13. Student loans, however, need to be repaid within the prescribed period, except in one circumstance: undue hardship. You can have your student loan debts discharged through bankruptcy court if you can prove that repaying them will impose undue hardship on you.

There are various tests used by courts to determine if student loan debt repayment actually constitutes undue hardship in a particular case. In Alabama, for instance, the courts make use of the Brunner test standard to make this determination. You may qualify under the following factors:

  • Poverty
  • Persistence
  • Good faith

In most cases, in order to discharge your student loan debts when filing for bankruptcy, you will need to file a Complaint to Determine Dischargeability. You will then produce evidence that repaying your student loan debts poses undue hardship for you. This is incredibly difficult to do and most people do not succeed. Student loan debts are categorically challenging to receive assistance for.

If you fail to prove your case, you will need to find a way to manage your student loan debts on your own. There are several options open to you, including income-based repayment, the pay-as-you-earn program, public service loan forgiveness (for certain public service jobs), and federal loan consolidation. A bankruptcy lawyer will be able to give you advice on what may work best for you.


  1. Your blog is improperly displaying characters when I use Ubunto with Google Chrome. Just thought you should know!

  2. Law is always so puzzling to me, thanks for making sense of it.

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  4. Good writing as always

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