Getting student loans discharged in a bankruptcy case is very difficult. For the most part, one must show that repayment would cause "undue hardship." Many courts use a three-factor test, called the Brunner test, to determine if you can meet the undue hardship requirement for student loan discharge. However, not all courts use this test. Some bankruptcy courts will look at the totality of the circumstances -- meaning they will consider all factors relevant to the hardship argument. Below are the factors that a court will consider if it uses the Brunner test.
Under the Brunner test, a bankruptcy court looks at the following three factors to determine if repayment of your student loans would cause an undue hardship, thereby justifying discharge of some or all of your student loan debt through bankruptcy.
- Based upon current income and expenses, you cannot maintain a minimal standard of living for yourself and your dependents if you are forced to repay your loans.
- Your current financial situation is likely to continue for a big part of the repayment period.
- A good faith effort has been made to repay the student loans.
Most courts are extremely reluctant to discharge student loans through bankruptcy, whether they use the Brunner test of apply other factors. However, if you are age 50 or older, are likely to remain at close to poverty for the rest of your life, and you have tried hard to pay off your loans, you may be a better candidate for student loan discharge.