Does bankruptcy remove student loans? The short answer is yes, but only in rare cases. You must file a separate lawsuit called an adversary proceeding and prove that paying the loans would cause you and your dependents an undue hardship. This is much harder than discharging credit card or medical debt, but it is possible with strong evidence and legal help.
Why Student Loans Are Hard to Discharge in Bankruptcy
Since 1976, federal student loans have been treated differently from most other debts in bankruptcy. Congress added a rule that requires borrowers to show “undue hardship” before a judge can wipe out the loans. Private student loans are also covered by this rule since 2005.
The idea is to prevent people from borrowing money for school and then wiping out the debt right after graduation. So the law sets a very high bar for discharge.
What Is the Brunner Test?
Most courts use a three-part test called the Brunner test to decide if you have undue hardship. You must prove all three parts to win.
- Part 1: If you repay the loans, you cannot maintain a minimal standard of living for yourself and your dependents.
- Part 2: Your financial situation is likely to stay bad for most of the loan repayment period.
- Part 3: You have made a good faith effort to repay the loans before filing bankruptcy.
Judges look at your income, expenses, health, age, job skills, and past payment history. A temporary job loss or a few missed payments is usually not enough.
What Changed in 2022? The New Department of Justice Policy
In November 2022, the Department of Justice and the Department of Education issued new guidance for bankruptcy trustees. The new policy tells trustees not to oppose student loan discharge requests unless there is clear evidence of abuse. This means more borrowers may get a discharge than before, but the final decision still rests with the bankruptcy judge.
As of August 13, 2026, this policy is still in effect. It does not automatically remove your loans, but it makes the process less adversarial.
How to Get Student Loans Removed in Bankruptcy
If you decide to pursue discharge, you must follow specific steps. Here is a simple overview of the process.
- File for bankruptcy under Chapter 7 or Chapter 13.
- After filing, start an adversary proceeding in the bankruptcy court.
- Submit a complaint that explains why your loans create an undue hardship.
- Provide financial records, tax returns, and a detailed budget.
- Attend a hearing and answer the judge’s questions.
You will need an attorney who specializes in student loan bankruptcy. The process can take months and cost thousands in legal fees, so weigh the benefits carefully.
Partial Discharge and Other Options
Even if you cannot get a full discharge, a judge might grant a partial discharge. For example, the court could reduce your loan balance or change the repayment terms. This can lower your monthly payments to a more affordable level.
Before filing bankruptcy, consider other federal programs that can help without court action.
| Option | Who It Helps | Key Requirement |
|---|---|---|
| Income-Driven Repayment (IDR) | Borrowers with high debt relative to income | Monthly payment based on discretionary income |
| Public Service Loan Forgiveness (PSLF) | Government or nonprofit employees | 120 qualifying payments |
| Total and Permanent Disability Discharge | Borrowers with severe disabilities | Documentation from a physician or VA |
| Closed School Discharge | Students whose school closed | Must have been enrolled at closure |
These options do not require bankruptcy and can be faster and cheaper.
Does Bankruptcy Remove Private Student Loans?
Private student loans are also subject to the undue hardship standard. The same Brunner test applies in most courts. However, private loans may have different terms, so you must check your loan contract.
You still need to file an adversary proceeding to try to discharge private loans. There is no separate rule that makes private loans easier to remove.
What About Federal Student Loans?
Federal student loans include Direct Loans, PLUS loans, and Perkins loans. They all fall under the same bankruptcy rule. But federal loans also have unique benefits like deferment, forbearance, and IDR plans that can help you avoid bankruptcy altogether.
If you are considering bankruptcy for federal loans, talk to a student loan counselor first. They can help you explore all options before you take the drastic step of court action.
Steps to Take Before Filing Bankruptcy
Do not rush into bankruptcy. First, gather your loan documents and find out your current balance and servicer. Next, apply for an income-driven repayment plan if you have federal loans. For private loans, contact your lender to ask about hardship programs.
Consult with a bankruptcy attorney who has experience with student loans. Many attorneys offer a free initial consultation. Ask about the odds of success and the total cost of the adversary proceeding.
Practical Summary
Bankruptcy can remove student loans, but only when you prove undue hardship in a separate lawsuit. The process is difficult and expensive, so it is not the first choice for most borrowers. Look into income-driven repayment, PSLF, or disability discharge before filing. If you do choose bankruptcy, work with an attorney and be prepared to show a long-term financial hardship.
Frequently Asked Questions
Can student loans be forgiven through bankruptcy?
Yes, but only if you file an adversary proceeding and prove undue hardship under the Brunner test, which is difficult to meet.
What is the Brunner test for student loans?
The Brunner test is a three-part legal standard that requires you to show you cannot maintain a minimal standard of living, your situation is unlikely to improve, and you made a good faith effort to repay the loans.
Does bankruptcy remove private student loans?
Private student loans can be discharged in bankruptcy, but they face the same undue hardship requirement as federal loans.
How long does a student loan bankruptcy case take?
The adversary proceeding can take several months to a year or more, depending on the court and the complexity of your case.
What happens to my student loans if I file Chapter 7?
Filing Chapter 7 does not automatically discharge your student loans; you must still file a separate lawsuit to attempt to get them discharged.
