Discharging Student Loans in Bankruptcy

Drowning in Student Loan Debt? Learn More About Your Options.

Bankruptcy can be complex, as there are many phases to it. At Owenby Law, P.A., most of our clients have a basic understanding of how bankruptcy works, but they are unaware of how certain types of debt obligations and income are treated under federal bankruptcy law—including student loan debt. While almost all income can be counted in a Chapter 13 bankruptcy payment plan, and most types of debt are dischargeable under either Chapter 7 or Chapter 13, there are some notable exceptions. For example, student loans debt must be evaluated on an individual basis.

To schedule your free initial consultation, call Owenby Law, P.A. at (904) 770-3141.

How Student Loan Debt Is Treated in Chapter 7 and Chapter 13

Student loans are not usually dischargeable in Chapter 7 bankruptcy, but there is an exception. If you can show by a preponderance of evidence that the repayment of your student loans will cause an undue hardship for you and your family, the bankruptcy court may allow the debt to be forgiven. To demonstrate undue hardship, your Jacksonville bankruptcy attorney must be able to point to an event or series of events that placed you in an untenable position with regard to this debt. Under Chapter 13, you are sometimes allowed to reduce your payments through an extension.

Determining If You Qualify for the "Undue Hardship Exception"

Many courts will use the Brunner test to evaluate undue hardship, which looks at:

  • Poverty – Are you unable to maintain a minimal standard of living based on your current income?
  • Persistence – Would your hardship persist for a significant part of the repayment period?
  • Good faith – Have you made a good faith effort to repay your student loan debt?

Contact Owenby Law, P.A. to Get Started with a Free Case Evaluation

If you are struggling to repay your student loan debt, we encourage you to explore your options with a Jacksonville bankruptcy lawyer at Owenby Law, P.A. We give debtors a chance to start over with a clean slate. If you are ready to take the first step toward a fresh start, please contact our firm today. During a free initial consultation, our attorneys can evaluate your financial situation and advise you on how to proceed with your case.