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Can You Discharge Student Loans Through Bankruptcy?


Student loan debt in the United States exceeds one trillion dollars, and that debt is debilitating for many people that are just starting out in their adult lives. For many, the cost becomes too great to bear along with other daily living expenses and costs. It is no surprise then, that so many people with student loan debt consider filing bankruptcy as a way to get rid of it.

Discharging student loan debt is largely misunderstood, and many people think it is not possible. While this is not necessarily true, it is difficult to do. An Orlando bankruptcy lawyer can help you through the process, and give you the best chance of discharging your student loan debt.

The Bankruptcy Abuse Prevention and Consumer Protection Act

Prior to 2005, it was easier to discharge student loans during bankruptcy. However, at that time, the Bankruptcy Abuse Prevention and Consumer Protection Act was passed. Under the Act, it is now more challenging to discharge federal and private student loans in bankruptcy, particularly when compared to other types of debt.

The only real way to discharge student loan debt through bankruptcy is to prove the loan causes you undue hardship. To do this, borrowers typically need to pass the Brunner Test in order to have the student loan discharged. The Brunner Test is based on a decision made in 1987 in federal court. To pass the test, you must prove the following three elements of your case:

  • Your income and expenses do not allow you to maintain a minimal standard of living for yourself or your dependents
  • Your financial situation is unlikely to change during the terms of your loan
  • You have made a good faith effort to pay back the loan

Other Factors to Consider About Bankruptcy and Student Loans

In addition to passing the Brunner’s test, there are other factors you need to take into consideration when trying to discharge your student loan through bankruptcy. These include:

  • Private loans vs. federal loans: If you have a federal student loan, you may be eligible for an Income-Driven Repayment Plan, which has low monthly payments. Sometimes, people do not have to make any monthly payments. This will present challenges when trying to prove undue hardship. On the other hand, some private loans are exempt from the Brunner’s test requirement, which could make the process easier.
  • Your job and budget may affect your case: Many aspects of your personal life will be analyzed during the bankruptcy process, including your job and your budget. Examine your budget to determine if it makes a case for undue hardship.

Our Bankruptcy Lawyer in Orlando Can Advise on Your Case

Before filing bankruptcy to discharge student loan debt, speak to an Orlando bankruptcy lawyer that can advise on the specific facts of your case. At Anderson & Ferrin, our skilled attorneys will determine if your student loan debt is dischargeable and if so, help you prove undue hardship to prove it. Call us today at 407-412-7041 or fill out our online form to schedule a free consultation.

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