If you're drowning in student loan debt, you're not alone—and you may be wondering whether bankruptcy could offer a way out. While it's commonly said that student loans can’t be discharged in bankruptcy, that’s not entirely true. The rules are complex, but under the right circumstances, it is possible.
Let’s break down what you need to know.
Can You Discharge Student Loans in Bankruptcy?
Yes, but it’s not automatic. Unlike credit card debt or medical bills, student loans require an extra legal step to be discharged in bankruptcy. You must file what’s called an “adversary proceeding”—a separate lawsuit within your bankruptcy case—where you prove that repaying the loans would cause undue hardship.
What is “Undue Hardship”?
This is the key legal standard the court uses to decide whether your student loans can be wiped out. In most courts, the Brunner Test is used to determine if you meet this standard. You must prove three things:
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You cannot maintain a minimal standard of living for yourself (and your dependents) if forced to repay the loans.
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Your financial situation is unlikely to change in the foreseeable future.
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You’ve made a good faith effort to repay the loans.
This can be a high bar to meet, but it’s not impossible—especially for people who are older, have permanent disabilities, or have faced long-term financial hardship.
What’s Changing?
There’s been a growing push to make student loan discharge more accessible. In 2022, the U.S. Department of Justice issued new guidelines designed to streamline and simplify the process for borrowers seeking student loan relief in bankruptcy. These changes are meant to reduce the burden on borrowers and bring more consistency to how cases are handled.
That means if you tried and failed to discharge student loans in the past, it may be worth revisiting your options under the new framework.
What Happens If You Can’t Discharge the Loans?
Even if your student loans aren’t fully discharged, bankruptcy can still help in other ways:
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Chapter 13 can allow you to reorganize your debt and pay student loans (and other debts) through a 3–5 year repayment plan.
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The automatic stay in bankruptcy can temporarily stop collections, giving you breathing room to work out a strategy.
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You may also be able to discharge other debts—freeing up money to better manage your student loans going forward.
Bottom Line: It’s Complicated, But Possible
Discharging student loans in bankruptcy isn’t easy—but it is possible with the right facts and the right approach. Every case is different, and the outcome often depends on how your situation is presented to the court.
If you’re overwhelmed by student loan debt and wondering what your options are, we can help. Contact our office for a free consultation. We’ll review your situation and help you understand whether bankruptcy could be a viable path forward.