Student loans can sometimes be cleared in bankruptcy, but only in limited situations. In most cases, you must prove that repaying the loans would cause undue hardship, which is evaluated by the bankruptcy court. The rules can vary depending on two factors: your circumstances and where your case is filed. If you live in Tennessee or have questions about student loan debt and bankruptcy, contact a bankruptcy attorney for more information.
Before we dive into student loan bankruptcy, it’s essential to understand the two main types of student loans: federal student loans and private student loans.
When it comes to bankruptcy, the process for discharging student loans varies between federal student loan debt and private loans. However, both types of loans can be discharged in bankruptcy under specific circumstances, though it’s not easy.
Filing bankruptcy is a legal way to get relief from overwhelming debt, but it doesn’t automatically wipe away all of your obligations. The bankruptcy court looks at your financial situation and determines which debts can be eliminated and which ones must be repaid. In most cases, student loan borrowers are still required to continue making student loan payments even after filing for bankruptcy.
To have student loans discharged in bankruptcy, you need to prove that paying back the loans would create an undue hardship. While bankruptcy law doesn’t clearly define undue hardship, courts often use the Brunner Test to assess whether an individual qualifies. The Brunner Test is a set of three factors that a bankruptcy judge will consider to determine if discharging your student loans is warranted. These factors are:
If you can prove all three factors under the Brunner Test, the court may agree to discharge student loans in bankruptcy. However, it’s essential to note that this standard is challenging to meet, and bankruptcy courts rarely discharge student loan debt.
An adversary proceeding is a separate lawsuit filed within the bankruptcy case to determine if your student loans can be discharged. To start an adversary complaint, you must file an individual petition with the bankruptcy court and prove that repaying your student debt would cause you undue hardship.
In an adversary proceeding, both you and your loan servicer (or other creditor) present evidence to the bankruptcy judge. This may include financial documents, testimony about your ability to pay, and proof of your efforts to work out a repayment plan or reduce your loans through federal student aid or debt settlement options.
The adversary complaint process can be time-consuming, expensive, and complex. Many student loan borrowers opt to work with a tax professional, student loan attorney, or bankruptcy lawyer who specializes in this area to help them go through the process.
If you’re considering bankruptcy to discharge student loan debt, The Pope Firm is here to help. Our team offers guidance on Chapter 7 and Chapter 13 bankruptcy, payday loan debt help, stopping creditor harassment, wage garnishment, and more.
Our bankruptcy attorneys will help you file for bankruptcy and find a path forward. Contact The Pope Firm today at 423-929-7673 to schedule an appointment.
Got Questions?
A: Yes, in some cases. Student loans may be forgiven through certain federal programs or discharged in bankruptcy (if you qualify under specific legal requirements).
A: There is no broad student loan forgiveness program introduced by President Donald Trump. Current policies depend on court decisions and federal laws.
A: Unpaid student loans can lead to collection efforts, late fees, wage garnishment for some federal loans, and damage to your credit.
A: Some federal student loans may qualify for forgiveness through programs such as income-driven repayment plans or Public Service Loan Forgiveness (PSLF). Private student loans generally do not qualify.
A: There is no universal student loan forgiveness program for 2026. Eligibility depends on three factors: current federal programs, legal changes, and individual circumstances.