Yes, you can put student loans in bankruptcies, but it is not easy. Under current US law, you must prove that paying your loans would cause an “undue hardship” on you and your dependents. This guide explains the process, the legal tests, and what you need to know as of August 2026.
Most people think student loans are impossible to discharge in bankruptcy, but that is a myth. While it is rare, courts have granted discharges when borrowers meet the strict standards. This article breaks down the rules so you can make an informed decision.
What Is the Legal Standard for Discharging Student Loans?
The key phrase is “undue hardship.” The Bankruptcy Code does not define it, so courts use two main tests: the Brunner test and the totality-of-circumstances test. Most federal courts use the Brunner test.
The Brunner Test
To pass the Brunner test, you must prove three things:
- You cannot maintain a minimal standard of living for yourself and your dependents if forced to repay the loans.
- Your financial situation is likely to persist for a significant portion of the repayment period.
- You have made good faith efforts to repay the loans before filing.
Each element is difficult to satisfy. Courts require concrete evidence, not just temporary financial trouble.
The Totality-of-Circumstances Test
A few courts use a more flexible approach. They look at your overall situation, including your income, expenses, age, health, and future earning potential. This test is slightly less rigid but still demanding.
How Do You File for Undue Hardship?
Filing for undue hardship is not automatic. You must file a separate adversary proceeding within your bankruptcy case. This is like a mini-trial where you present evidence to the judge.
You will need to provide detailed financial records, tax returns, pay stubs, and a budget. You may also need expert testimony about your future earning capacity. The process can take months and may involve legal fees.
| Step | What Happens | Typical Timeline |
|---|---|---|
| 1. File bankruptcy petition | You start a Chapter 7 or Chapter 13 bankruptcy case. | Day 1 |
| 2. File adversary complaint | You file a separate lawsuit asking the court to discharge student loans. | Within the bankruptcy case |
| 3. Attend hearing | You present evidence and argue your case before a judge. | Several months after filing |
| 4. Court decision | The judge rules on whether you have proven undue hardship. | Varies, often 6-12 months |
What Types of Student Loans Can Be Discharged?
Most federal student loans are eligible, including Direct Loans, PLUS loans, and Perkins loans. Private student loans are also covered under the same undue hardship standard. However, the type of loan does not matter as much as your financial situation.
One important note: if you are in default, you still can file, but the process may be more complicated. The court will look at your entire financial picture, not just the loan type.
What Are the Alternatives to Bankruptcy?
If you do not qualify for undue hardship, consider other options. These do not erase the debt but can make payments manageable:
- Income-driven repayment plans that cap payments based on your income.
- Deferment or forbearance to temporarily pause payments.
- Loan consolidation to combine multiple loans into one.
- Public Service Loan Forgiveness for qualifying public service workers.
These alternatives are often more realistic than bankruptcy for most borrowers.
When Should You Consider Bankruptcy?
Bankruptcy should be a last resort. You might consider it if your loans are so large that you will never repay them, and you have a permanent disability or other long-term barrier to earning income. You also need to have exhausted other options like income-driven plans.
Consult a bankruptcy attorney who understands student loan law. They can evaluate your case and tell you if you have a realistic chance of success.
Important Changes and Updates for 2026
As of August 2026, there have been no major federal law changes that make discharging student loans easier. The undue hardship standard remains in place. However, some courts have shown more willingness to grant discharges in recent years, especially for older borrowers with long repayment histories.
Always check the latest guidance from the Department of Education and your local court. Rules can vary by circuit.
Practical Tips for Your Case
If you decide to pursue bankruptcy, follow these tips:
- Document every financial hardship, including medical bills, job loss, or disability.
- Keep a detailed budget showing you have no disposable income.
- Show a history of good faith payments, even small ones.
- Work with an attorney who has handled student loan discharges.
These steps can strengthen your case and improve your chances.
In summary, you can put student loans in bankruptcies, but only by proving undue hardship. The process is complex and not guaranteed. Before filing, explore all other repayment options and consult a legal expert. If you meet the strict standards, a discharge is possible, but it requires significant evidence and patience.
Frequently Asked Questions
Can I put student loans in bankruptcy?
Yes, you can, but you must file a separate adversary proceeding and prove that repaying the loans would cause undue hardship to you and your dependents.
What is the undue hardship test for student loans?
The most common test is the Brunner test, which requires you to show you cannot maintain a minimal standard of living, that your situation will persist, and that you made good faith efforts to repay.
Do private student loans count in bankruptcy?
Yes, private student loans are also subject to the same undue hardship standard, so they can be discharged if you meet the legal requirements.
How hard is it to discharge student loans in bankruptcy?
It is very hard, and courts approve discharges only in rare cases where borrowers provide strong evidence of long-term financial hardship.
What should I do before filing for bankruptcy on student loans?
You should try income-driven repayment plans, deferment, or forbearance first, and consult a bankruptcy attorney who specializes in student loan law to evaluate your chances.
