Will Declaring Bankruptcy Discharge My Student Loans?

Washington DC Bankruptcy Attorney Discusses a Little Known Fact

Most people assume that one cannot discharge a student loan debt through bankruptcy. The accepted fact is that you can get rid of most kinds of unsecured debt through bankruptcy, but student loans are one thing you can’t wipe out through bankruptcy.

A careful reading of bankruptcy law reveals that this is almost always true.

For those able to prove that repaying a loan would cause undue hardship, student loans can, in fact, be discharged by bankruptcy. Undue hardship is undefined in bankruptcy law, meaning that each individual court decides what it means, making it an incredibly difficult condition to meet. For starters, one must be able to prove not only an inability to repay loans now, but very little chance of being able to pay them in the future either.

Most borrowers don’t even try to discharge student loans since common wisdom says that it is impossible. In 2007 there were as many as 69,000 people who might have qualified for such a discharge, but less than 300 included student loan debt in their bankruptcy filings.

Recent Court Victory Proves the Exception to the Rule

A law school graduate recently made a partial discharge of his student loan debt after a protracted 10-year court battle.

The man was loaned approximately $85,000 as a law school student. After three separate, failed attempts failing to pass the bar exam, he was only able to find work as a juvenile counselor. He declared bankruptcy at 33, married and with a young child.

The court rejected a claim that the man could get a second job, citing clear evidence that he had maximized his income. They noted instead that his wife could work three days per week instead of just one. The court also determined that the man was justified in rejecting repayment options requiring monthly installments he could not afford for the next thirty years.

The appeals court affirmed the finding of undue hardship and partially discharged $53,000 from his student loan debt.

How Does the Court Decide What Constitutes Undue Hardship?

The Brunner test, named after a bankruptcy court case regarding undue hardship, is employed by many courts and helps determine if continuing to try and pay off an education debt will cause undue hardship. There are just three criteria to the Brunner test:

  1. Will continuing to make loan payments cause the borrower to be unable to maintain a basic standard of living?
  2. Is the borrower’s financial situation unlikely to improve?
  3. Has the borrower made an effort to pay his or her loans in good-faith?

Those who meet these criteria are permitted to file what is known as an adversary proceeding, almost like a lawsuit within the bankruptcy case itself. It is perfectly acceptable to file this yourself, but the process is even more complex than the bankruptcy filing you started with. It is highly recommended, therefore, that an experienced bankruptcy attorney handle this filing on your behalf.

I Don’t Think I Can Pay My Student Loans and I Need a Washington DC Bankruptcy Attorney

Sometimes things change in our lives, and not always for the best. The Washington DC bankruptcy attorneys at The Law Office of Kevin D. Judd understands such problems. A financial crisis can happen at any time, and when it does, life becomes more difficult. Even if you don’t qualify for a student loan discharge, filing for bankruptcy can open up resources that may allow you to pay your debts in a reasonable manner. We want to make the adjustment as simple and painless as possible. Contact us right away.



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