Can claiming bankruptcy clear student loans? The short answer is yes, but it is very difficult. You must file a separate lawsuit called an adversary proceeding and prove that repaying your loans would cause an undue hardship on you and your dependents.
Most people who file bankruptcy do not get their student loans discharged. However, there are some situations where it is possible, especially if you have a permanent disability or extremely low income. This article explains the legal process, the standard courts use, and practical steps you can take.
What Is the Legal Standard for Discharging Student Loans?
Under current U.S. law, student loans are treated differently from other debts like credit cards or medical bills. To get them wiped out in bankruptcy, you must win an adversary proceeding. In that lawsuit, the judge applies the Brunner test, which has three parts.
First, you must show that paying your loans would prevent you from maintaining a minimal standard of living. Second, you must prove that your financial situation is likely to continue for a significant portion of the repayment period. Third, you must show that you have made a good faith effort to repay the loans before filing.
Because this test is strict, most judges deny discharge. According to one well-known study, only about 12% of people who try to discharge student loans in bankruptcy succeed. That means you need strong evidence and a solid legal strategy.
When Can You Claim Undue Hardship?
Undue hardship is the key phrase in student loan bankruptcy cases. Courts look at your income, expenses, age, health, and ability to work. If you have a permanent disability that prevents you from working, you have a better chance. Also, if you are over 65 with no retirement savings and no income, you might qualify.
But having a low income alone is not enough. You must show that your situation will not improve in the future. For example, if you have a chronic illness with no cure, that helps. If you have a temporary job loss, that is not enough.
Here is a comparison of factors that courts consider:
| Factor | Helps Your Case | Hurts Your Case |
|---|---|---|
| Income | Below poverty level | Steady income, even if low |
| Health | Permanent disability | Treatable condition |
| Age | Near retirement or older | Young with working years ahead |
| Job skills | No marketable skills | Transferable skills |
| Payment history | Made many payments | Never paid or avoided payments |
As you can see, the more factors that help you, the higher your chance of success. But even then, the judge has discretion.
How to File an Adversary Proceeding
If you decide to pursue bankruptcy discharge of student loans, you must follow specific steps. First, you need to file for bankruptcy under Chapter 7 or Chapter 13. Then, you must file a separate lawsuit within the bankruptcy case.
Here is the step-by-step process:
- Hire a bankruptcy attorney who has experience with student loan cases.
- File a petition for Chapter 7 or Chapter 13 bankruptcy.
- File an adversary proceeding complaint with the bankruptcy court.
- Attend a hearing where you present evidence of undue hardship.
- Wait for the judge’s decision, which can take several months.
This process can cost thousands of dollars in legal fees. However, some attorneys offer payment plans or pro bono services. Also, you can apply for a fee waiver if your income is very low.
If you win, your student loans are discharged, meaning you no longer have to pay them. If you lose, you still owe the loans, but you might be able to negotiate a repayment plan.
Alternatives to Bankruptcy for Student Loans
Before you file bankruptcy, consider other options that might work better. These alternatives can reduce your payments or even forgive your loans without the legal battle.
- Income-driven repayment plans cap your monthly payment at a percentage of your discretionary income.
- Public Service Loan Forgiveness forgives remaining balances after 120 qualifying payments for government or nonprofit employees.
- Total and Permanent Disability discharge is available if you have a disability that prevents you from working.
- Closed school discharge applies if your school closes while you are enrolled or shortly after you withdraw.
These options are often easier and faster than bankruptcy. For example, income-driven repayment plans can lower your payment to $0 if your income is below the poverty line. And after 20 or 25 years, any remaining balance is forgiven, though you may owe taxes.
If you have federal loans, you can apply for these programs directly through the U.S. Department of Education. Private loans have fewer options, but some lenders offer hardship programs.
Recent Changes and Future Outlook
As of August 11, 2026, the legal standard for discharging student loans in bankruptcy remains the Brunner test. However, there have been efforts to make it easier. The U.S. Department of Justice and the Department of Education issued new guidance in 2022 that encourages bankruptcy trustees to not oppose discharge requests in certain cases. This guidance is still in effect.
Under this guidance, trustees are told to consider whether the borrower is likely to be in default for a long time, whether they have made good faith payments, and whether they have limited income. This has led to more successful discharges, but it is not a guarantee.
Some lawmakers have proposed bills to make student loans dischargeable like other debts, but none have passed as of this date. So, for now, you must still prove undue hardship.
Practical Tips for Your Case
If you are considering bankruptcy to clear student loans, here are some actionable tips:
- Document your income and expenses thoroughly for at least six months.
- Get medical records if you have a disability that affects your ability to work.
- Show a history of making payments, even small ones, to demonstrate good faith.
- Consult with an attorney who specializes in student loan bankruptcy.
These steps can make your case stronger and improve your chances of success.
Final Thoughts
Claiming bankruptcy can clear student loans, but it is not easy. You must prove undue hardship in an adversary proceeding. Most attempts fail, but with the right evidence and legal help, some borrowers succeed. Before filing, explore income-driven repayment, disability discharge, and other forgiveness programs. If bankruptcy is your only option, prepare a strong case and seek professional guidance.
Frequently Asked Questions
Can I get my student loans discharged in bankruptcy?
Yes, but only if you prove undue hardship in a separate court action called an adversary proceeding.
What is undue hardship for student loans?
Undue hardship means that paying your loans would prevent you from maintaining a minimal standard of living, and this situation is likely to last for a long time.
Do I need a lawyer to file for student loan bankruptcy?
It is highly recommended because the process is complex and the legal standard is strict.
Are there alternatives to bankruptcy for student loans?
Yes, you can try income-driven repayment plans, Public Service Loan Forgiveness, or disability discharge.
How long does an adversary proceeding take?
It can take several months to a year, depending on the court and the complexity of your case.
