Can Student Loans Go Away in Bankruptcy?

Student loans are not dischargeable in bankruptcy unless a debtor can show “undue hardship.”

To determine undue hardship, Courts use what is known as the Brunner Test.  

To show undue hardship under the Brunner Test:  (1)  the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for herself and her dependents if forced to repay the loans;(2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) that the debtor has made good faith efforts to repay the loans. Brunner v. New York State Higher Educ. Servs. Corp., 831 F. 2d 395 (2d Cir. 1987).  All three-prongs of the test must be met for a determination of undue hardship.

If the Court determines that the debtor meets the requirements of the Brunner Test for undue hardship, then the student loan obligation will be cancelled.  However, this determination is extremely difficult to obtain.

If you cannot meet the undue hardship test, there are still other alternatives outside of bankruptcy that may provide you with relief.

Please contact our office if you have questions about student loans and bankruptcy, and what alternative may be available.