It’s been said that it’s impossible for student loans to be discharged, even if an individual files for bankruptcy. Although not technically true, the bar to do so is considerably high. However, there are legal steps a person may take to try to do it.
If someone files for Chapter 7 or Chapter 13 bankruptcy, it is possible to have his student loans discharged. That’s only if a person can prove to the bankruptcy court that repaying his or her loans would cause “undue hardship” to him or any of his dependents. Most courts will use a 3-part test to determine if this undue hardship is met. In order to have his loans discharged, one must meet ALL 3 requirements of the test:
- If the debtor is forced to repay the loan, he or she would not be able to maintain a minimal standard of living.
- There is evidence that this hardship will continue for a significant portion of the loan repayment period.
- He made good-faith efforts to repay the loan before filing bankruptcy (generally the debtor has been in repayment for at least five years).
Creditors are entitled to challenge a person’s discharge request. If his creditors show up to challenge him, the process may be significantly costlier and more time consuming. That’s because each side will have to hire expert witnesses to help prove their cases.
Before seeking to have a loan discharged through bankruptcy, one must consider the extreme difficulty of the task. For example, let’s say someone went to law school but is unable to find steady work as an attorney. Therefore, he takes a job as a waiter making much less than he expected when he first took out the loans. No court will consider him to be in undue hardship. The discharge is really meant for two individuals. The first is one who is unable to work any longer. The other is one who has dependents and will be unable to buy minimal necessities if he must repay the loans.
The good news is that if someone’s loans are discharged successfully, he will not have to repay any portion of them. He will also be eligible to apply for federal student aid in the future.
Adrienne Woods
The Law Offices of Adrienne Woods, P.C.
Adrienne@woodslawpc.com
917.447.4321
adriennewoods.wordpress.com 
I understand there was a recent case in California in which the judge discharged the debtor because he found the debtor, at his salary level, was simply unable to pay and thus suffering from an “economic hardship”. I don’t know if the case was appealed. Do you have any knowledge of the outcome. RSealey Law Offices of
Thank you for your contribution, Reggie.