Most people believe student loans cannot be wiped out (“discharged”) in bankruptcy. Federal laws have made this difficult, but not impossible. Student loans can be discharged if repaying the loan is an “undue hardship.”

The Undue Hardship Exception

For your student loans to be wiped out in bankruptcy, we must prove it would be undue hardship for you to pay them. Qualifying under this test is not easy, but some of our clients do qualify.

To meet the test, you must show three facts:

1. Poverty. This means your current income and expenses cannot provide a minimal standard of living for you and your family dependents if you are forced to repay your loans.
2. Persistence. This means your poverty is likely to continue for a substantial part of the student loan repayment period.
3. Good faith. This means you have made a good and sincere effort to repay your student loans but you have not been able to do so.

Additional requirement apply to Health Education Assistance Loans (HEAL). If you have such a loan, you must show your repayment is more than 7 years past due and requiring you to repay it would be an “unconscionable” burden on your life. “Unconscionable” means extreme unfairness.

Do you qualify?

If you think the “undue hardship exception” might apply to you, you should call us for a free consultation. We will discuss your circumstances and tell you what can be done with your student loan.

What is the procedure to challenge a student loan in bankruptcy?

If you want to try to discharge your student loans in bankruptcy, we must file a lawsuit within a chapter 7 or chapter 13 bankruptcy. This is called an “adversary proceeding” which gives us an opportunity to prove you meet the exceptions which allow you to escape repayment of your student loan.

Do I have other defenses to repayment of my student loan?

If you were lied to in the creation of the loan, if someone at your school misrepresented the facts of your education, or if your school breached its contract to you, you may have other reasons to stop payments on your student loan. If this applies to you, we may be able to obtain a court ruling in your favor.