Student Loans in Bankruptcy

Student loans can sometime be written off in bankruptcy, but it can be quite hard to meet the necessary conditions to do so.


The Discharge of Student Loans

Student loans are NOT among those debts that can NEVER be “discharged”—legally, permanently written off on bankruptcy. Bankruptcy law does totally exclude certain kinds of debts from being discharged–one example is unpaid child support.

Instead student loans are among those debts that are discharged IF they meet certain conditions. They are somewhat like income taxes, which can definitely get discharged. With income taxes there is a list of conditions; with student loans there is only one to meet. Yet, discharging a student loan can be much more difficult than discharging an income tax debt. That’s because the conditions for discharging income taxes are mostly straightforward, compared to the much vaguer condition for student loans.

The Vague Condition of “Undue Hardship”

Bankruptcy law allows a student loan to be discharged if “excepting such debt from discharge… would impose an undue hardship on the debtor and the debtor’s dependents.” Section 523 (a)(8) of the U.S. Bankruptcy Code. So if you can show that your student loans are causing “undue hardship,” you can discharge those loans.

What’s “Undue Hardship”?

The problem is in figuring out what that phrase means.

In practical terms what does the statute consider a “hardship”? And what more does it take for a “hardship” to rise to the required level of an “undue” hardship?

The phrase “undue hardship” did not originate in Congress. It came from a Commission on the Bankruptcy Laws created by Congress way back in the early 1970s to help guide a total overhaul of our bankruptcy laws.

When Congress used that term in the statute on student loan discharge quoted above, it did not define it. Many other important terms used in the Bankruptcy Code are directly defined within the Bankruptcy Code. See Section 101 on “Definitions.” But not this one.

A Practical Standard for “Undue Hardship”

Congress left it to bankruptcy judges and courts of appeals to apply this term to people’s circumstances. They’ve focused on coming up with practical conditions required to have a hardship that is serious enough to be considered to be “undue.”

Over the decades most of the bankruptcy courts in the country have largely settled on three hurdles to jump for undue hardship:

1. To make the required payments on the student loan under your current income and expenses would leave you unable to maintain even a minimal standard of living.

2. This current situation of being unable to maintain a minimal standard of living is expected to continue over all or most of the repayment period of the student loan.

3. You’ve made a real effort at paying the student loan and/or qualifying for programs to address the debt responsibly.

Important Considerations

  • You must ask for a hardship discharge during your bankruptcy case or you’ll continue to owe your student loan(s). This is done through what is essentially a lawsuit in the bankruptcy court. You must convince the bankruptcy judge that you’ve jumped the above three hurdles to get a decision in your favor. 
  • The timing of your request can make all the difference. You may not qualify for undue hardship now, but you may do so in the future. An example would be if you have a worsening chronic medical condition. Talk with your bankruptcy lawyer about reopening your bankruptcy case later when you better qualify for undue hardship.
  • Consider filing a Chapter 13 “adjustment of debt” bankruptcy now if you may not qualify now but will in the next few years. You could likely not make any student loan payments for a few years. Then later in your 3-to-5-year case, or as soon as you’d qualify, you’d ask the court for an undue hardship determination, while your Chapter 13 case is still open.


It’s often not easy to meet all three conditions of the undue hardship standard. It can be a rather lengthy and expensive legal process. But an increasing number of people have large student loans as a major portion of their debts. If that’s you, get legal advice from an experienced and conscientious bankruptcy lawyer. The bigger your student loans, the bigger their impact on your future, and all the more important to understand your rights and options.


Can Bankruptcy Get You Out of Student Loans?

To “discharge”–legally write-off—a student loan in bankruptcy you have to show “undue hardship.” What does that take?


The total amount of student loan debt in the U. S. surpassed $1 trillion dollars ($1,000,000,000,000.00) a couple of years ago. For many people it is their biggest debt. For others the burden of student loan debt is preventing them from buying a home. Student loans are a large part of why for the first time in many generations many people fear that their financial well-being will be worse than that of their parents. Student loans are threatening the American Dream.

It All Turns on “Undue Hardship”

The relevant part of the Bankruptcy Code states that a student loan is only discharged if it “would impose an undue hardship on the debtor and the debtor’s dependents.” What does that mean?

Congress didn’t explain what would is a “hardship,” nor the difference between an ordinary “hardship” and an “undue” hardship which would get you out of paying a student loan.

“Undue” means “unreasonable; going beyond the limits of what is normal.” So Congress seemed to say that while you cannot discharge a student loan that is causing you a hardship, you can if is causing you an abnormal, unreasonable hardship.

But that still doesn’t help much. Practically speaking how can you tell if the hardship caused by your student loan is abnormal or unreasonable?

Court-Devised Three-Part Test

During the last several decades that this statute has been on the books, bankruptcy courts all over the country have tried to apply this “undue hardship” standard. Although there are some subtle differences among courts in different regions of the country, there is a general consensus that you must meet three conditions to qualify for “undue hardship”:

1. If you were now required to pay on the student loan, under your current income and expenses you would be unable to maintain even a minimal standard of living.

2. Your current inability to maintain a minimal standard of living while repaying the student loan is expected to stretch out over all or most of the loan repayment period.

3. You had previously made a meaningful effort to repay the loan, or to qualify for appropriate forbearances, consolidations, and administrative payment-reduction programs.

Important Considerations

#1: Meeting all three “undue hardship” conditions is not easy. Most people’s student loans don’t qualify. It often takes careful planning with the help of an attorney experienced in discharging student loans.

#2: With many kinds of debts which might not be discharged in bankruptcy the burden is on the creditor to challenge the discharge of the debt. But with student loans the burden is on the borrower to raise and show “undue hardship” during the bankruptcy case. Otherwise the student loan will continue to be owed.

#3: “Undue hardship” has to be shown through an “adversary proceeding,” in effect a lawsuit within a bankruptcy case that is ruled upon by the bankruptcy judge.

#4: If your hardship is progressive in nature—through a worsening physical disability, for example, you may not qualify for “undue hardship” until well after your bankruptcy case is completed. If so, you may be able to reopen your bankruptcy case so the bankruptcy court can make that determination. Or another option may be to file a Chapter 13 case, which generally lasts 3 to 5 years, and only try to qualify for “undue hardship” towards the end of your case. That may allow you to avoid making any payments on the student loans for the first few years of the case, and then take the opportunity to discharge the student loan only when the facts of the case better support doing so.