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Chapter 7 Bankruptcy

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Can I File Bankruptcy on Student Loans? Here’s the Truth

Can I File Bankruptcy on Student Loans in the U.S.?

Can I file bankruptcy on student loans? It’s a question many borrowers ask when they find themselves overwhelmed with debt and few options left. While student loans are notoriously hard to discharge, it is possible in certain circumstances, and the process is evolving.

Bankruptcy may not wipe out student debt easily, but recent legal changes have made it more accessible than before. This article explains the process, the legal standards, and what you need to know if you’re considering bankruptcy as a way to eliminate student loans.

What Makes Student Loans Hard to Discharge?

Student loans are treated differently than most unsecured debts. While credit cards, personal loans, and medical bills can typically be discharged in Chapter 7 bankruptcy, student loan debt requires a higher legal standard.

To eliminate student loan debt through bankruptcy, you must prove that repaying the loan would cause “undue hardship.” This standard has been interpreted differently across jurisdictions, but it’s historically been tough to meet.

Understanding the Brunner Test

In most cases, courts use the Brunner test to determine undue hardship. You’ll need to show:

  • You cannot maintain a minimal standard of living if forced to repay your student loans.
  • Your financial situation is unlikely to change over a significant portion of the repayment period.
  • You have made good faith efforts to repay the loans.

If you pass this test, you may be able to discharge your student loans, either fully or partially.

Changes That May Make Discharge Easier

In 2022, the U.S. Department of Justice and the Department of Education introduced new guidelines to streamline the process of discharging federal student loans in bankruptcy.

These updates aim to reduce unnecessary legal burdens and help bankruptcy filers present their cases more effectively. As part of the new process:

  • The government may agree with borrowers’ undue hardship claims more frequently.
  • Debtors can complete an attestation form to demonstrate their financial condition.
  • Courts may be more likely to approve discharge or partial forgiveness under Chapter 7 or Chapter 13.

This doesn’t guarantee success, but it means borrowers who once felt hopeless now have a clearer path forward.

Filing Bankruptcy on Student Loans: What to Expect

Step 1: File for Bankruptcy

You must first file a Chapter 7 or Chapter 13 bankruptcy case. Student loan discharge is not automatic — it requires an extra legal step.

Step 2: File an Adversary Proceeding (AP)

You must initiate a separate lawsuit within the bankruptcy case called an adversary proceeding. This is where you ask the court to review your student loans and determine if they qualify for discharge.

Step 3: Provide Evidence

Use documents like income statements, monthly expenses, employment records, and past repayment attempts to demonstrate undue hardship. This is where legal support is especially useful.

Can I File Bankruptcy on Student Loans and Move Forward?

Discharging student loans through bankruptcy remains challenging, but it’s more achievable than it used to be. With evolving legal standards and clearer guidelines for demonstrating undue hardship, more borrowers are successfully navigating this process. If you’re asking, can I file bankruptcy on student loans? The answer is yes, when specific conditions are met. Exploring your eligibility with an experienced professional is the best next step.

Get Help Filing Bankruptcy on Student Loans Today

Still wondering, can I file bankruptcy on student loans? You don’t have to go through it alone. The right legal support can help you understand your options, prepare your case, and navigate the adversary proceeding process.

Get a free evaluation from Bankruptcy Attorneys to see if your student loan debt qualifies for discharge under current laws and guidance.

Frequently Asked Questions (FAQs)

Yes, but you must pass the undue hardship test through an adversary proceeding.

Federal loans may now be easier to discharge due to updated DOJ guidance, but private loans can also be challenged.

It’s a separate lawsuit within the bankruptcy case used to request student loan discharge.

It varies, but expect several months for the entire bankruptcy and adversary proceeding.

Yes, it will appear on your credit report, but many find the long-term relief outweighs the short-term impact.

Key Takeaways

  • Student loans aren’t automatically discharged in bankruptcy.
  • You must prove undue hardship through a legal proceeding.
  • The Brunner test is used in most courts to evaluate hardship.
  • Recent updates have made the process more accessible.
  • Legal guidance is essential for filing and presenting your case.

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