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Chapter 7 Bankruptcy

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Can You File Bankruptcy on Private Student Loans?

Can You File Bankruptcy on Private Student Loans?

Can you file bankruptcy on private student loans if they’ve become too much to handle? Many borrowers assume student loans can’t be discharged in bankruptcy—but that’s not always true, especially for private student loans.

While discharging private student loans is difficult, recent legal shifts and court rulings have made it more achievable in certain cases. Understanding your rights and options is key to deciding your next step.

What the Law Says About Private Student Loans in Bankruptcy

Filing bankruptcy on private student loans is different from federal loans. To succeed, you typically must prove undue hardship, but private loans sometimes offer additional legal angles.

What Qualifies as a Private Student Loan?

  • Loans from banks or private lenders (not the U.S. Department of Education)
  • Bar study loans, medical residency loans, or direct-to-consumer education loans
  • Loans not part of a federal aid program

Because these are private agreements, they don’t come with the same repayment plans or protections as federal loans. That’s part of why people ask: Can you file bankruptcy on private student loans when options run out?

The Brunner Test: Undue Hardship Requirement

To discharge private student loans through bankruptcy, most courts apply the Brunner test, which asks:

  1. Can you maintain a minimal standard of living if forced to repay the loan?
  2. Are your financial difficulties likely to continue?
  3. Have you made a good-faith effort to repay the loan?

If you meet all three parts, you may be able to discharge your private student loans through a process called an adversary proceeding.

Adversary Proceeding: How It Works

Simply filing for bankruptcy does not automatically discharge student loans. You must file a separate lawsuit within your bankruptcy case, called an adversary proceeding.

Here’s how it works:

  1. File Chapter 7 or Chapter 13 bankruptcy.
  2. Submit an adversary complaint asking for student loan discharge.
  3. Provide evidence of undue hardship.
  4. Attend hearings or mediation (with your attorney).
  5. Await the court’s ruling.

Courts are becoming more receptive to these requests, especially when borrowers can show persistent hardship or predatory loan terms.

Can You File Bankruptcy on Private Student Loans Without the Brunner Test?

In some cases, yes. Not all private student loans are automatically protected like federal loans. Some may be challenged more easily if:

  • They were not used for qualified education expenses
  • The school was not an eligible institution
  • The lender did not follow truth-in-lending disclosures

This means you may not need to prove undue hardship at all. An experienced bankruptcy attorney can help determine if your loan qualifies.

Can You File Bankruptcy on Private Student Loans Successfully?

So, can you file bankruptcy on private student loans? Yes, but it’s not automatic. You’ll need to file the right type of case, challenge the loan through an adversary proceeding, and meet legal tests—or show that the loan doesn’t qualify for protection in the first place.

Bankruptcy is a serious decision,and it may be an option for borrowers facing unmanageable private student loan debt.

Get Help with Filing Bankruptcy on Private Student Loans

Still asking, “Can you file bankruptcy on private student loans”? Let the team at Bankruptcy Attorneys guide you. We’ll review your loan details, help you understand your legal options, and support you through the process. Get a free evaluation today to discuss your legal options.

Frequently Asked Questions (FAQs)

Yes, but you must file an adversary proceeding and meet the undue hardship standard or challenge the loan’s status.

Chapter 13 may not discharge the loan, but it can pause collections and provide temporary relief through a repayment plan.

Approval rates have increased, especially for borrowers with low income and long-term hardship.

Yes, if the loan doesn’t meet the definition of a qualified education loan, you may not need to prove undue hardship.

Your bankruptcy continues, but the private loan remains. You may still benefit from discharge of other debts.

Key Takeaways

  • You can file bankruptcy on private student loans, but discharge isn’t automatic.
  • An adversary proceeding is required to challenge the loan.
  • Courts use the Brunner test to determine undue hardship.
  • Some private loans may be dischargeable without proving hardship.
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