Student loans are generally NOT dischargeable in Chapter 7 bankruptcy, which is a type of bankruptcy that allows individuals to eliminate most unsecured debts. However, there are some limited circumstances where student loans may be dischargeable in Chapter 7 bankruptcy.
To discharge student loans in Chapter 7 bankruptcy, you must demonstrate that repayment would impose an undue hardship on you and your dependents. This standard is very difficult to meet and requires a showing that you cannot maintain a minimal standard of living if you are forced to repay the loans.
Undue hardship is usually determined by applying the Brunner test, which is a three-part test that requires a showing of:
- That you cannot maintain a minimal standard of living based on your current income and expenses;
- That your financial hardship is likely to continue for a significant portion of the repayment period; and
- That you have made a good faith effort to repay the loans.
Meeting the undue hardship standard is very difficult, and most student loan borrowers are not able to do so. As a result, it is important to explore other options for managing your student loan debt, such as income-driven repayment plans, deferment, or forbearance.
If you are considering bankruptcy and have student loan debt, it is important to consult with an experienced bankruptcy attorney who can help you understand your options and navigate the complex bankruptcy process.
Fogt Law Can Help You
If you are struggling with debt and considering bankruptcy, it is important to work with an experienced attorney who can help you understand your options. Attorney Christopher Fogt has helped many clients in the Federal Southern District of Ohio get a fresh start through bankruptcy. Contact us today to schedule a consultation and learn more about how we can help you.