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What Happens to Student Loans in Bankruptcy Discharge?


With the increasing cost of college, many families face a significant financial burden from student loans. Understanding your options regarding discharging private student loans in bankruptcy can provide some sense of financial relief. To ensure a smoother process, it’s best to hire a bankruptcy attorney to discuss all of your options about eliminating student loan debt in bankruptcy discharge. 

Can I discharge my student loans in Chapter 7 or Chapter 13 bankruptcy?

Student loans are often non-dischargeable in bankruptcy Chapter 7 and Chapter 13. However, if you can prove that repaying the loans will cause undue hardship, you may be eligible for discharge. You need to file a Complaint to Determine Dischargeability. This results in an adversary proceeding, a type of lawsuit filed in connection to a more extensive bankruptcy proceeding, and is separate from your bankruptcy case. 

Learn more about eliminating debt with bankruptcy discharge

What constitutes undue hardship, and how is it determined?

Courts determine an undue hardship based on a series of tests. Discharging student loans in bankruptcy remains difficult but not impossible. Debtors can prove an undue hardship if they have a severe disability that prevents them from working, having dependents, or if they’re elderly. 

One of the tests issued is called the Brunner test. You can discharge student loans under these circumstances:

  • Repaying student loans will put you and your dependents into poverty and prevent you from maintaining a basic living standard.
  • Your situation will continue over a substantial portion of the student loan repayment period.
  • You’ve made a substantial effort to repay the loans.

Another test used is the Totality of Circumstances, where the courts evaluate all relevant factors, including:

  • Past, present, and future financial resources 
  • Necessary living expenses to determine an undue hardship

Although these are the two most common tests administered, some courts use others. A bankruptcy attorney can determine which test the jurisdiction will use. 

What happens to student loans in bankruptcy Chapter 7?

Your student loans aren’t automatically discharged in Chapter 7 bankruptcy. You must file a complaint for dischargeability, which initiates an adversary proceeding. You and your attorney will work to prove undue hardship. The courts will administer one of the tests to determine if you qualify. If the court doesn’t believe that you have proof of undue hardship, your student loans won’t be discharged, and you’ll be required to pay them back in full. 

What happens to student loans in Chapter 13 bankruptcy?

Chapter 13 bankruptcy requires you to pay back part of your debt over three to five years. Part of your remaining debt, including student loans, may be discharged at the end of your case period. During this time, student loan servicers are prohibited from trying to collect debt through the repayment period. Chapter 13 bankruptcy classifies student loans as non-secured debt, which means you’re not required to pay them back in full through the repayment plan. 

What are the student loan bankruptcy laws in Tennessee?

The student loan bankruptcy laws in Tennessee require that you file a complaint to discharge your student loans. Debtors must prove that repaying their student loans will cause an undue hardship. The court will administer one of the undue hardship tests based on which jurisdiction you’re in. If the court finds that you’ve proven undue hardship, your student loans may be discharged. 

Middle Tennessee’s Top Bankruptcy Attorneys

Navigating the bankruptcy process can be daunting, but enlisting a bankruptcy attorney that you can trust will ease the process and provide you with the best options. 

Flexer Law has been serving the legal needs of Middle Tennessee residents since 1981. Our experienced bankruptcy attorneys will work diligently on your behalf to provide the best financial outcome for you. 

We have three office locations throughout Middle Tennessee to accommodate your legal needs. Contact usfor a free consultation, either in person or virtually, and we’ll get started on finding the best solution to get your financial life back on track. 

Flexer Law Office Locations for Student Loan Lawyers

  • Nashville, TN
  • Murfreesboro, TN
  • Columbia, TN
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