Student Loan Debt
Did you know that it is possible to file bankruptcy on student loans? Though it is a difficult process, it is a potential option under current legislation and case law. To discuss your options, schedule a free, confidential consultation with Meredith Law Firm.
Can I File Bankruptcy on Student Loans?
Yes, it is possible to file bankruptcy on student loans. That said, it typically only occurs in very difficult financial circumstances under the current legislation and case law. To obtain student loan forgiveness, a separate lawsuit needs to be filed in addition to your bankruptcy case, which is known as an adversary proceeding.
In order to ascertain whether you may be likely to succeed in an adversary proceeding, our team at Meredith Law Firm will evaluate your situation and only proceed if we believe that you have facts consistent with the current case law.
Schedule a free and confidential consultation with our team today to discuss your case.
What Is the Brunner Test?
To be successful in an adversary proceeding, there needs to be proof of ‘undue hardship,’ as described by the Bankruptcy Code. Our court uses a standard set under the opinion in Brunner v. NY State Higher Education Services Corp., 831 F. 395 (2nd Cir. 1987).
Known as the Brunner Test, it sets out three requirements to establish undue hardship. These are:
- You must show that you cannot maintain a minimum standard of living if forced to repay the loans (this generally means a budget living at or very close to poverty levels).
- You must establish that circumstances exist suggesting that you will be unable to repay the loan during a significant portion of the repayment period (this usually requires some sort of disability).
- You must show that you made good faith efforts to repay the loans (including seeking income-based or alternative repayment plans).
In your free consultation, we will discuss your situation with you and assess your likelihood of meeting these three tests.
How Likely Is Student Loan Forgiveness?
As noted above, it is a difficult process to satisfy the criteria in order to obtain student loan forgiveness in bankruptcy. We examine each case individually and proceed only if we believe there is a likelihood of a successful outcome.
Those over the age of 50, who have attempted to pay off their loans and are likely to remain in a poor financial situation for the rest of their life, could be better candidates for student loan forgiveness.
As of yet, there has been no new legislation specific to bankruptcy dischargeability since the start of the coronavirus pandemic. We are always monitoring developments in the law and are hopeful that new legislation will give us a better tool to reduce or eliminate student loan debt.
Speak to Us About Student Loan Debt in Bankruptcy
If you would like to learn more about student loan forgiveness in bankruptcy, speak to our experienced team at Meredith Law Firm. We are a debt relief agency with considerable experience in bankruptcy law.