Can I Discharge a Student Loan in Bankruptcy?

March 4, 2022 By: Carrie Weir

Permanently Ridding Yourself of Student Loan Debt

According to recent statistics, the average amount of student loan debt is more than $32,000 per borrower. With the economic challenges brought on by the pandemic, about one in every six persons with a student loan is in default and many more are struggling to stay current.

If you have substantial student loan debt, but a modest or low-paying job, you may have considered a Chapter 7 bankruptcy filing as a way to get a fresh financial start. Chapter 7 will allow you to permanently discharge certain debts in exchange for relinquishing certain assets to the bankruptcy court. In Texas, where the state property exemptions in personal bankruptcy are very generous (and most people keep most of their property), such a filing can be even more attractive. But can you discharge student loan debt? If so, what are the conditions for permanently ridding yourself of that obligation?

The Limited Ability to Discharge Student Loan Debt in Chapter 7 Bankruptcy

It’s extremely difficult to terminate your obligation to repay student loans in a bankruptcy proceeding. You may be able to reorganize/restructure student loan payments in a Chapter 13, proceeding, but discharge is rare.

The Undue Hardship Exception for the Discharge of Student Loan Debt

The lone instance where you may be able to discharge student loan obligations in Chapter 7 involves demonstrating to the bankruptcy court that you would experience “undue hardship” if required to continue making those payments. There is no single test employed by the courts, however, for establishing what constitutes “undue hardship.” Among the standards used by courts are:

• The Brunner test (typically followed in Texas), based on a court ruling of the same name—This test requires that you show three things:
  • You cannot maintain a minimal standard of living if you have to pay your student loans
  • You have no reasonable expectation that your financial situation will change for much of the repayment period
  • You have tried, in good faith, to repay your student debt
• The “totality of the circumstances” test—The court will look at all the details of your situation and determine whether it’s reasonable to expect you to pay your student loans

Contact an Experienced Rockwall, TX Bankruptcy Attorney

At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Kaufman County, Rockwall County, Collin County, Dallas County, Hunt County and the surrounding counties.