Student Loan Debt: Is Bankruptcy an Option?

Student loan debt bankruptcy is only an option for a small number of individuals who can prove beyond a doubt that their student loan debt would impose undue hardship on themselves and their dependents.

Courts have established various tests for evaluating whether enforcing a debt would impose undue hardship on an individual. One of the most common tests for student loan debt bankruptcy is the Brunner test. Under this test, in order for a debt to be discharged, the court must find that:

  1. The debtor is unable to maintain a minimal standard of living based on current income and expenses.
  2. Additional circumstances indicate that the current situation will persist.
  3. The debtor made a good faith effort to repay his or her student loans.

If a student loan debt bankruptcy discharge will relieve the student of undue hardship then a student loan dept can be completely forgiven.

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