Getting student loans discharged via a bankruptcy proceeding is very difficult, if not an impossible task. This is because the bankruptcy laws that govern how student loans are handled in bankruptcy were changed as a result of a new bankruptcy law that passed in 2005.
Now you must prove to a court that having to payback your student loans would impose an “undue hardship on you and your dependents”, and there is little that you can do to change how this provision may affect your particular situation.
Undue Hardship
So you are now probably wondering what “undue hardship” is, and if it may apply to your own personal circumstances. Different courts will use various tests to determine what constitutes undue hardship—where you file bankruptcy will therefore have a profound effect on how the court views your situation, and how they interpret the bankruptcy laws.
While it is beyond the scope of this article to go into detail about undue hardship, a common test that courts use is the Brunner test, which requires:
- The debtor and his/ her dependents cannot maintain a “minimal” standard of living if forced to repay the student loans
- Circumstances exist that will make the debtor’s current situation continue for a significant portion of the repayment period.
- The debtor has put in the proper effort to make his/ her repayments.
Under most circumstances you will not be able to show the court that paying back your student loans will cause you undue hardship.
Bankruptcy, while a potential option, should not be looked at as a plausible way to eliminate your student loan debt, and should only be viewed as a last resort when you have exhausted all of your other feasible options.
Filing for Bankruptcy
You will have to file a petition that is commonly referred to as an “adversary proceeding” in order to get your case heard by the bankruptcy court. This isn’t a normal proceeding if you were to file for bankruptcy without the need to have your student loan debt considered for discharge.
Make sure that you inform your bankruptcy lawyer about your intention to have your student loans considered for discharge, as they will know how to go about filing for the adversary proceeding.
If you forget to include your student loans in your recent bankruptcy case, I believe that you can request an adversary proceeding even after your bankruptcy has concluded. I recommend that you find a good lawyer if you truly want to give it a shot, although most lawyers will probably laugh at you when you tell them that you want to have your student loans eliminated via bankruptcy.
In the end I wouldn’t put too much stock in this option, although if you think that your situation warrants “undue hardship”, then by all means take your chances.
