Dealing with student loans can be overwhelming, especially when financial hardship hits. Many people wonder if it’s possible to discharge student loans in bankruptcy. This blog post will explore the complexities surrounding this issue and explain what conditions must be met to include student loans in a bankruptcy discharge.

Understanding the Challenge:

Traditionally, student loans are considered non-dischargeable in bankruptcy under most circumstances. This means that unlike credit card debt or medical bills, student loans usually remain intact even after going through the bankruptcy process. The rationale behind this policy is that education is an investment in one's future earnings.

The Brunner Test:

However, there is an exception under which student loans can be discharged, known as the "Brunner Test." This test was established in a 1987 court case and is used in most federal circuits to determine if student loans can be eliminated in a bankruptcy filing. The Brunner Test requires you to prove three key points:

1. Undue Hardship: You must demonstrate that paying the loan will prevent you from maintaining a minimal standard of living.
2. Persistence: You must show that this hardship is likely to persist for a significant portion of the loan repayment period.
3. Good Faith: You need to have made good faith efforts to repay the loan before filing for bankruptcy.

Applying the Brunner Test:

Let’s say, for example, you are a single parent with a fixed income, and your student loan payments consume a large portion of your monthly earnings, leaving you unable to cover basic living expenses like housing, food, and healthcare. Additionally, if you have a chronic illness that prevents you from increasing your income, this situation might meet the criteria for undue hardship under the Brunner Test.

Recent Developments:

It’s important to note that the legal landscape regarding student loans and bankruptcy is evolving. Recent court cases have seen some debtors successfully argue for the discharge of their student loans under very specific circumstances. Furthermore, there is ongoing legislative discussion about making student loans easier to discharge in bankruptcy.

How to Proceed:

If you believe that your situation might meet the Brunner Test criteria, the first step is to consult with a bankruptcy attorney who has experience in this area. Your attorney can help you understand the likelihood of discharging your student loans and guide you through the complex legal process.

While discharging student loans in bankruptcy is challenging, it's not impossible under certain conditions. Understanding the legal criteria and consulting with a knowledgeable attorney are crucial steps in exploring this option. Remember, each case is unique, and recent legal changes continue to affect how these cases are evaluated.