Student loans are difficult, but not impossible, to discharge in bankruptcy. To do so, you must
show that payment of the debt “will impose an undue hardship on you and your
Courts use different tests to evaluate whether a particular borrower has
shown an undue hardship. A common test is the Brunner test which requires a showing that 1) the
debtor cannot maintain, based on current income and expenses, a “minimal” standard of
living for the debtor and the debtor’s dependents if forced to repay the student loans; 2)
additional circumstances exist indicating that this state of affairs is likely to persist for a
significant portion of the repayment period of the student loans; and 3) the debtor has made good
faith efforts to repay the loans.
(Brunner v. New York State Higher Educ. Servs. Corp., 831 F. 2d 395 (2d Cir. 1987)).
Not all courts use this test. Some courts will be more flexible, some less.
If you can
successfully prove undue hardship, your student loan will be completely canceled. Filing for
bankruptcy also automatically protects you from collection actions on all of your debts, at least
until the bankruptcy case is resolved or until the creditor gets permission from the court to start
Assuming you can discharge your student loan debt by proving hardship,
bankruptcy may be a good option for you. It is a good idea to first consult with a lawyer or other
professional to understand other pros and cons associated with bankruptcy. For example, a bankruptcy
can remain part of your credit history for ten years. There are costs associated with filing for
bankruptcy as well as a number of procedural hurdles. There are also limits on how often you can
file for bankruptcy.
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