Can You File Bankruptcy on Student Loans?
Bills Bottom Line
Filing bankruptcy on student loans is harder than for other debts—but it’s not impossible. A 2022 rule change from the Department of Justice clarified the process and made it more accessible for borrowers who genuinely can’t repay their loans. The key is an extra step called an adversary proceeding. Here’s how it works.
Table of Contents
You’ve probably heard that bankruptcy won’t touch student loans. A friend said it. Your servicer may have said it. Old articles still say it.
It’s true that student loans are treated differently under bankruptcy law than credit cards or medical bills. And yes, they usually survive a standard discharge. But for those who genuinely can’t repay their loans, an extra step could change the outcome.
Certain student loans can be discharged in bankruptcy
Most unsecured debts could be wiped out the moment a bankruptcy discharge is granted. Student loans are not among them.
Under federal law, they typically survive unless you prove that repaying them would cause “undue hardship.” That’s a real bar—but for borrowers who genuinely can’t repay, it’s a bar that can be cleared. It applies to both Chapter 7 and Chapter 13 bankruptcy.
Here’s how they compare:
| Chapter 7 | Chapter 13 | |
|---|---|---|
| Timeline | 4–6 months | 3–5 years |
| Student loans during filing | Paused by automatic stay | Paused, included in repayment plan |
| Can student loans be discharged? | Yes, via adversary proceeding | Yes, via adversary proceeding |
| If no adversary proceeding filed | Full balance survives discharge | Full balance survives at plan end |
The chapter you file affects the timeline, not whether discharge is possible. The discharge mechanism is the same in both chapters.
The extra step: filing an adversary proceeding
The Department of Justice maintains a streamlined process for certain federal student loan discharge cases. Introduced in 2022, the new process has significantly improved outcomes for borrowers who use it.
How it works: After you file for bankruptcy, you file a separate complaint against your loan servicer inside the same case. That complaint starts an adversary proceeding, which is a request asking the court to discharge your student loans.
What you need to prove before you can get your student loans discharged in bankruptcy
To succeed, you need to prove what courts call “undue hardship.” Most courts apply what’s known as the Brunner Test—a three-part standard. You need to show all three:
- You can’t currently pay your loans and maintain a minimal standard of living.
- Your financial hardship is likely to continue; it’s not just temporary.
- You’ve made a good-faith effort to repay your loans.
That third prong is broader than it sounds. Making a loan payment, applying for an income-driven repayment plan, contacting your servicer, or applying for consolidation could all count as evidence of good faith.
You’ll also complete a detailed attestation form that the Department of Justice uses to evaluate your situation. An Assistant U.S. Attorney reviews it and makes a recommendation to the judge.
Currently, only Direct Loans and Direct Consolidation Loans held by the Department of Education are eligible under the streamlined process. Borrowers with FFEL loans, Perkins Loans, or private loans can still file an adversary proceeding and prove undue hardship. Without the DOJ reviewing an attestation form and making a recommendation on your behalf, that typically means a harder and more expensive process.
What makes a strong case
The DOJ guidance identifies five circumstances that support a presumption of future inability to repay. If one or more apply, your case could be meaningfully stronger:
- Age 65 or older
- A disability or chronic injury that limits your earning capacity
- Unemployed for five or more of the last 10 years
- You never obtained the degree the loan was meant to finance
- Your loan has been in repayment for 10 or more years
These aren’t guarantees. They shift the weight of the analysis in your favor.
Some private student loans can already be discharged in bankruptcy
Not all private loans require you to prove undue hardship. Some could discharge in a standard bankruptcy without an adversary proceeding because they don’t meet the legal definition of a “qualified education loan.”
Loans that may fall outside that definition include loans that are:
- Above the school’s cost of attendance
- For non-accredited schools
- Bar study loans
- Made while enrolled less than half-time
If you have private loans, verify the loan type with a bankruptcy attorney before assuming the undue hardship standard applies to you.
If student loan discharge isn’t realistic, here are your options
Discharge is demanding, the process costs time and money, and legal help isn’t always accessible. If that’s where you are, these federal options may help:
- Income-driven repayment (IDR): Caps your payment as a percentage of discretionary income, sometimes to $0. After 20 to 25 years of qualifying payments, the remaining balance may be forgiven. Forgiven amounts are generally treated as taxable state income, so consult a tax advisor about your specific situation.
- Deferment or forbearance: Temporarily pauses payments during hardship. Interest typically accrues during forbearance.
- Total and Permanent Disability (TPD) discharge: For borrowers with a qualifying permanent disability. Covers Direct Loans, FFEL, Perkins, and TEACH Grant obligations. Typically faster and less costly than bankruptcy, and unlike IDR forgiveness, it does not create a tax liability.
- Federal Direct Consolidation: Combines multiple federal loans into one, preserves all federal protections, and could unlock IDR plans you may not currently have access to. Applying for consolidation also counts as good-faith evidence if you later pursue discharge.
- Public Service Loan Forgiveness (PSLF): Cancels the remaining balance after 10 years of qualifying payments for borrowers in eligible public service jobs. Unlike IDR forgiveness, PSLF remains tax-free.
One thing worth pointing out: Refinancing federal loans into private loans permanently eliminates IDR, TPD, PSLF, and every other federal protection. For borrowers under financial stress, this option typically costs more than it saves.
Bills Action Plan
- Pull your loan details from studentaid.gov using your FSA ID. Identify whether your loans are Direct Loans, FFEL, Perkins, or private. The type of loan determines which options apply to you.
- Check the DOJ presumption factors against your situation: age 65+, disability, employment history, degree status, and how long the loan has been in repayment. If one or more apply, an adversary proceeding may be worth discussing with an attorney.
- If you decide to file for bankruptcy, contact an attorney who has experience with student loan adversary proceedings specifically. General experience isn’t enough.
Key Terms
Discharge: The legal elimination of a debt through bankruptcy. A discharged debt is no longer owed and creditors cannot collect on it.
Adversary proceeding: A separate lawsuit filed within a bankruptcy case. For student loans, it is the mechanism for requesting a discharge based on undue hardship.
Undue hardship: The legal standard a borrower must meet to discharge student loans in bankruptcy. Most courts apply a three-part Brunner test covering current inability to pay, likely future inability, and good-faith repayment effort.
Direct Consolidation Loan: A federal loan that combines multiple federal student loans into one. Preserves federal protections including IDR access and forgiveness program eligibility. This article is for general education. We can’t advise you on whether to file for bankruptcy protection or which chapter is right for you. Consult a bankruptcy attorney for advice specific to your situation.
Free up cash each month with Freedom Debt Relief
Ozzy S., Freedom client
“Right away, I had more money each month because of program costs so much less than what I was paying on my minimums.”
Actual client of Freedom Debt Relief. Client’s endorsement is a paid testimonial. Individual results are not typical and will vary.
What happens to student loans in Chapter 13?
Chapter 13 does not automatically discharge student loans. During the repayment plan, which typically runs 3 to 5 years, student loans may be paused so payments aren’t required while the plan is active. The full balance, plus any accrued interest, is still owed when the plan ends. You can file an adversary proceeding within a Chapter 13 case to seek discharge, but that is a separate action from the plan itself. Some borrowers use Chapter 13 specifically to get breathing room on other debts while managing student loans afterward.
What happens to a co-signer if I discharge my student loans?
Discharging your student loans in bankruptcy protects you, not your co-signer. If a private loan has a co-signer, the co-signer remains fully liable for the debt even after your discharge is granted. Some private lenders offer a co-signer release process, but it typically requires a strong payment history and a qualifying credit profile. If protecting a co-signer matters to your decision, discuss it with a bankruptcy attorney before filing.
What does the adversary proceeding cost?
There is no court filing fee when the debtor files the adversary proceeding. The real cost is attorney fees, which vary by case complexity and location. The borrowers most likely to meet the undue hardship standard are often the ones least able to afford litigation. Some nonprofit legal aid organizations handle adversary proceedings at reduced or no cost. Your local bar association can help identify them.
10 Comments
You asked about student loans and bankruptcy. Bankruptcy courts follow current rules, and not the rules that may have been in place when the debt was incurred. In other words, the fact the loan was from before the bankruptcy law changed in 1978 does not matter. Consult with a bankruptcy lawyer in your state to learn if the debt is considered a hardship under today's rules.
See the Dept. of Education's Federal Student Aid Forgiveness, Cancellation, and Discharge Web page to learn more about federal student loan cancellation programs.
I suggest that you take all of your medical records and meet with a bankruptcy attorney.
I can't give you legal advice, but the fact that you were adhering to a payment plan worked out with a duly appointed debt collector may give you grounds to argue that the fact that the collector was let go does not mean that your agreement is voided.