Student Loans and Bankruptcy

Part of the American Dream includes going to college, getting a degree, and working a good paying job. In today’s economy, that dream also usually includes taking out student loans to pay for education. Most of the time, the debt is worthwhile because it opens up new career and earning potential, but the payments can sometimes be difficult to keep up with. Thankfully, there are many types of grants and loans available with payment plans to fit most budgets. Still, sometimes the payments are unmanageable, especially when combined with other debts, and you may need to take action to get your finances under control.

Loan Forgiveness

Most people have heard that it’s impossible to include student loans in a bankruptcy, but under some very specific circumstances, they can be included. You may be able to file an adversary proceeding to have your student loans forgiven. This is not a bankruptcy, but does discharge your student loans. Just having trouble keeping up with student loan payments will not qualify you for forgiveness. You’ll need to pass the Brunner Test by demonstrating to the court that:

  1. You would be unable to maintain a basic, minimum standard of living if you were required to make student loan payments.
  2. You have been making good faith efforts to pay off the student loans for a substantial time period. If you graduate and then ask for forgiveness just a few months later, you’re unlikely to qualify.
  3. This difficult financial situation is unlikely to improve over the life of your loan. Making payments will continue to be a hardship that keeps you from a basic standard of living.


If you pass the Brunner Test and the Means Test, you might qualify for a Chapter 7 and be able to include your student loans. A Chapter 7 discharges most types of unsecured debt, such as credit cards and medical bills. Student loans are closely evaluated and the court may decide to only grant a partial discharge. If you don’t pass the Means Test and have debt other than student loans, you may still choose to file a Chapter 13 bankruptcy. While this won’t discharge your student loans, it will put you on a reduced payment plan for your other debt for 3-5 years, which might free up enough money to catch up on your student loan payments. At the end of the repayment period, most of your debt will be discharged, and you can put more money toward paying off your student loans.

Here to Help

Discharging student loans through bankruptcy is a complicated process with many requirements to meet. If you’re in debt and can’t keep up with payments, bankruptcy might be the best option for you. Whether you have student loans or not, I can assess your overall situation and offer my expert advice to help you make the best decision possible for your financial future.