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Can You Discharge Your Student Loan Debts During Bankruptcy?

Miniature graduation cap on hundred dollar bills

In most cases, student loan debts are nondischargeable during the bankruptcy process. However, there are rare exceptions if the person filing for bankruptcy is able to prove that paying the debts would cause extreme financial hardship.

Whether you file Chapter 7 or Chapter 13 bankruptcy, the discharge order you get probably won’t include student loan debt without your ability to prove undue hardship. You will have to file a separate adversary proceeding called a Complaint to Determine Dischargeability under either Chapter 7 or Chapter 13 bankruptcy. This is the proceeding in which you set out to prove “undue hardship” resulting from student loans, and it’s helpful to have an attorney to argue on your behalf.

Most courts use what’s known as the Brunner Test to determine whether your circumstances qualify as undue hardship. Here are some of the criteria:

  • Paying your student loans would not allow you to maintain a minimal standard of living.
  • You would face significant financial hardship throughout most of the loan repayment period if forced to pay back your student loans.
  • You have already made good-faith efforts to repay your student loan before you filed for bankruptcy.

If your debt comes from tuition for a for-profit college, you could call the school’s practices into question. Additionally, if you have any proof that there were deceptive practices, breach of contract or other issues involved with your student loans, you should raise them with a judge, as it could give you a better chance of discharging your loans.

The provider of your student loan will almost always fight back. However, if you have a strong case for discharging your student loans, it may be worth the effort to rid yourself of the burden.

To learn more about your options, consult with an attorney at Miller Law Group PC, working as a debt relief agency serving central Virginia.