Can You File for Bankruptcy on Student Loans?

Jeff Field

5 years ago

For the past four decades, a general rule when filing bankruptcy was that you could not discharge debts for student loans. While this is still usually the case, there may be some situations in which it is possible to discharge these debts as part of a bankruptcy filing.

Borrowers must demonstrate that their student loan debt places undue hardship on them. The most common standard used to determine this is the Brunner Test, which requires that all of the following conditions exist:

The borrower cannot maintain a “minimal” standard of living based on his or her current income and expenses. The person’s dependents may also suffer if the borrower is forced to repay the student loans.
There are additional circumstances that indicate the state of affairs causing this undue hardship will persist for a large portion of the student loans’ repayment period.
The borrower has already made good faith efforts to pay back the loans.

While not all courts allow for the Brunner Test, Georgia bankruptcy courts frequently use it to determine whether a petitioner meets the standards of undue hardship.

Will you be able to prove undue hardship in your case? This answer depends largely on your financial circumstances. You should seek the counsel of a skilled bankruptcy attorney for advice on how best to proceed.

If you cannot get your student loans discharged, you may have other options to reduce the financial burden of that debt. The Institute for College Access and Success offers a variety of tips, such as choosing the right repayment option, avoiding default and exploring the possibility of consolidation. Taking the right steps now could save you considerable financial headaches in the future.

If you wish to discharge any of your debts by filing for Chapter 7 bankruptcy, meet with an experienced Georgia bankruptcy attorney at Jeff Field & Associates. Call our firm at 404-381-1278 or contact us online to schedule a free initial consultation.