How to File Bankruptcy for Student Loan

Want to learn How to File Bankruptcy for Student Loan? Have you ever wondered if there’s a way out from under the heavy weight of student loans? In an ideal world, going to college would set you on a path to a brighter future, free from the stress of overwhelming debt. Unfortunately, for many, student loans can turn that dream into a financial nightmare. 

How to File Bankruptcy for Student Loan

When the burden becomes too much, some might see bankruptcy as a last hope. But here’s the burning question: Can bankruptcy help you break free from student loan debt? Without wasting much time, let’s dive into the details and figure out how to navigate this tricky terrain.

Understanding Bankruptcy and Student Loans

Bankruptcy is like a legal reset button, giving individuals or businesses a chance for a fresh financial start by either wiping away debts or reorganizing them. This is all under the watchful eye of a court. However, when it comes to student loans, things get a bit trickier. 

The rules are strict, and that’s because laws have changed over the years, making it more challenging to find relief from student loan debts through bankruptcy. It’s like having a set of rules that are a bit harder to bend when it comes to dealing with those pesky student loans.

Types of Bankruptcy

When it comes to bankruptcy, individuals typically have a couple of options to consider, namely Chapter 7 and Chapter 13. Let’s take a closer look at these two;

Chapter 7 Bankruptcy

This is often referred to as the “liquidation” bankruptcy. What does that mean? Well, it’s like a financial spring cleaning where you sell off some of your assets to gather the funds needed to pay off your debts. But here’s the catch – certain assets may get a pass and won’t be part of the sell-off. This is because state laws sometimes give these assets a sort of ‘immunity’ from the liquidation process.

Chapter 13 Bankruptcy

Now, this one is known as the “reorganization” bankruptcy. Think of it like a financial makeover. Instead of selling off assets, you get to create a game plan, a repayment plan to be exact. This plan spans over a more extended period, usually three to five years. What’s the benefit? 

Well, during this time, you can hold on to your assets. It’s like a structured approach to settling your debts, allowing you to retain control over what you own. So, Chapter 13 gives you a bit more flexibility and a chance to navigate your way through financial turbulence without parting ways with everything you own.

The Challenge with Student Loans

In the past, getting rid of student loans through bankruptcy was more doable. However, the landscape changed, especially with the introduction of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. This act significantly toughened the process, making it much more challenging to discharge student loans, but don’t worry, there is a way.

Brunner Test

Now, let’s talk about the Brunner Test, a crucial aspect if you’re aiming to discharge student loans through bankruptcy. It’s like the eligibility exam; you have to pass this to move forward. Here’s what it involves:

1. Poverty: This is the first checkpoint. You have to show that you can’t maintain a basic standard of living for yourself and your dependents if you’re forced to pay back those loans. It’s like proving that your financial situation is on shaky ground and repaying the loans would push you over the edge.

2. Persistence: The second is proving that your financial struggles are not just a temporary glitch. You need to demonstrate that your tough financial situation is likely to stick around for a good part of the time you’re supposed to be repaying the loans. This is like convincing the court that your financial storm isn’t just passing through but might be here for a while.

3. Good Faith Effort: Lastly, you’ve got to show that you’re not dodging your responsibility. The court wants to see that you genuinely tried your best to repay the loans. It’s like proving that you’re not looking for an easy way out but that circumstances have truly made it almost impossible for you to meet your repayment obligations.

So, the Brunner Test is a three-step challenge that you need to tackle if you’re hoping for that elusive discharge of student loans through bankruptcy.

Steps to File Bankruptcy for Student Loans

Now, let’s discuss the steps to file for Bankruptcy for a student loan;

1. Assess Your Financial Situation: Evaluate your income, expenses, assets, and debts to determine if bankruptcy is the best option. Consider consulting a bankruptcy attorney for personalized advice.

2. Credit Counseling: Before filing for bankruptcy, complete a credit counselling course from a government-approved agency within 180 days.

3. Gather Documentation: Collect all financial documents, including loan statements, tax returns, pay stubs, and any correspondence with lenders.

4. File Bankruptcy Petition: Then, submit a bankruptcy petition to the court. If filing for Chapter 7 or Chapter 13 bankruptcy, include a separate adversary proceeding to request student loan discharge based on undue hardship.

5. Attend Court Hearings: Attend hearings as required by the court. During the adversary proceeding, present evidence supporting undue hardship, such as medical records, proof of income, and budget calculations.

6. Negotiate with Lenders: Lenders may offer settlement options or repayment plans outside of bankruptcy court. Explore these options with them before pursuing bankruptcy.

7. Follow Court Orders: If the court grants a discharge for student loans, adhere to any conditions outlined in the court’s decision without questions.


Filing bankruptcy for student loans is a complex and challenging process, often requiring substantial evidence of undue hardship. While it’s not impossible, success is rare without significant financial hardship. So, before pursuing bankruptcy, you can explore alternative options such as income-driven repayment plans, loan consolidation, or deferment.

Additionally, seek guidance from a qualified bankruptcy attorney who can provide personalized advice based on your unique circumstances. There, you have our take on how to file bankruptcy for a student loan; let us know what you think about this post. Please help us share this blog post with your friends.

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