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What does ‘undue hardship’ mean in student loan bankruptcy cases?

On Behalf of | Jun 5, 2024 | Personal Bankruptcy

Struggling with student loan debt can feel overwhelming, especially when you have been juggling it along with other financial responsibilities. Fortunately, bankruptcy could offer you a path to relief. And understanding the ‘undue hardship’ standard is key to obtaining the best possible outcome for your case.

What is the ‘undue hardship’ standard?

Undue hardship is a legal standard used in bankruptcy cases to determine if a student loan can be discharged. Essentially, if repaying your student loan would cause you and your family significant financial difficulty, then the court can consider it as an undue hardship. However, it is not a simple concept and is often difficult to meet.

A closer look at the Brunner Test

Most courts use the Brunner Test to evaluate undue hardship. This test has three factors to consider:

  • Poverty: Based on your current income and expenses, you cannot maintain a minimal standard of living if forced to repay the loan.
  • Persistence: Your financial struggle is likely to persist for a significant part of the loan repayment period.
  • Good faith: You have made a sincere effort to repay the loan before filing for bankruptcy.

If you meet all three factors, you may be eligible to discharge your student loans in a bankruptcy case. However, it is important to note that courts may have different interpretations of your situation. Consulting with an experienced bankruptcy lawyer may be helpful for your case.

Bankruptcy can help you

Bankruptcy is not an instant relief, but it can offer you a fresh start. If you can prove undue hardship, you might be able to discharge some or all of your student loan debt. This could free up resources for other essential needs, providing a glimmer of hope in challenging times.

Understanding the undue hardship standard can be complex, but it is a crucial step toward handling student loan bankruptcy. Remember, everyone’s financial situation is unique, and so is their path to relief. If you are struggling with student loan debt, it is important to seek assistance from a legal professional who can guide you through your options.