Student Loans & Bankruptcy

In general, you cannot have your student loan debt discharged by means of a chapter 7 or Chapter 13 bankruptcy. You would need to prove that repaying your student loans would cause you undue hardship to have them eliminated.

What precisely constitutes undue hardship varies from court to court. The burden of proof lies with you for demonstrating you cannot feasibly repay your loans.

What is known as the Brunner Test is utilized by some court, which looks at three factors. The first factor is establishing you are in poverty and cannot maintain a minimal standard of living for yourself if forced to pay your loans. Another issue is whether your current financial situation is likely to persist over a significant part of the repayment plan. Lastly, you need to show to the court that you have already made a good faith effort to repay your student loans.

To try and discharge your student loans via bankruptcy, you need to begin by filing a formal complaint with the bankruptcy court where you will need to demonstrate that repayment would cause and undue hardship to you.

If you have been the victim of unfair practices by your lender such as breach of contract or fraud. These defenses to repayment can be raised in the creditor’s Proof of Claim and if you succeed will you owe nothing on your debt.

If you are struggling to repay your student loans, you should seriously consider speaking with an Oakland bankruptcy attorney to go over your concerns and your eligibility for having your loans discharged.