How Federal Student Loans Are Discharged Through Bankruptcy
Student loan debt has historically been treated as close to non-dischargeable. That has not changed as a matter of law. What changed is how the government evaluates these cases, and that shift is the reason discharge is realistic today in a way it was not a few years ago.
Discharge under 523(a)(8) requires a separate legal filing beyond the bankruptcy case itself, and it only applies to federal loans held by the Department of Education. Private student loans follow a different, more limited path.
The Two-Step Process: Bankruptcy Filing And Adversary Proceeding
Step One: Filing For Chapter 7 Or Chapter 13
The debtor first files a standard bankruptcy case, either Chapter 7 or Chapter 13, through the U.S. Bankruptcy Court for the District of Colorado. This establishes the financial record the discharge request will rely on.
Step Two: The Adversary Proceeding Under 11 U.S.C. 523(a)(8)
Once the bankruptcy case is open, the firm files an adversary proceeding, a separate lawsuit within the case, naming the loan holder and requesting discharge under 523(a)(8). This filing presents the financial evidence needed to establish undue hardship.
What Counts As Undue Hardship: The Brunner Test
Courts assess undue hardship using the three-part Brunner test: present inability to maintain a minimal standard of living while repaying the loan, circumstances indicating that inability will persist, and a good faith effort to repay before filing. All three must be shown.
The Department of Justice's November 2022 guidance to its own attorneys tracks these same three factors, which is what makes documentation of income, expenses, and repayment history the center of every filing.
The 2022 DOJ Attestation Process Changed The Odds
On November 17, 2022, the Department of Justice, working with the Department of Education, introduced a standardized Attestation Form for federal student loan discharge cases. Before this guidance, government attorneys contested most discharge requests by default. Under the current process, a debtor who completes the attestation and meets the three-factor standard can receive a government recommendation for discharge without a full trial.
This process applies only to loans held by the Department of Education. Guaranty-agency FFEL loans and private loans are not covered and require a different approach.
Frequently Asked Questions
Can You Discharge Student Loans In Bankruptcy?
Yes, federal student loans can be discharged under 11 U.S.C. 523(a)(8) if the debtor proves undue hardship through an adversary proceeding filed inside a Chapter 7 or Chapter 13 case. It has never been automatic, and it still requires that separate filing.
Are Private Student Loans Dischargeable?
Private student loans fall outside the 2022 DOJ attestation process, which applies only to Department of Education-held loans. Private loan discharge is evaluated case by case and is a separate conversation with your attorney.
What Is An Adversary Proceeding?
An adversary proceeding is a lawsuit filed within an open bankruptcy case. For student loan discharge, it names the loan holder as a defendant and asks the court to find that repayment would impose undue hardship under the Brunner test.
How Long Does The Attestation Review Take?
For Department of Education-owned loans, attestation reviews commonly conclude within a few months of submission. Loans serviced through guaranty agencies under the FFEL program generally take longer, since those agencies may apply their own review timeline.
Serving Centennial, Colorado Springs, And The Denver Metro Area
The firm's Centennial office sits in Arapahoe County, and the Colorado Springs office serves El Paso County. Both bankruptcy and adversary proceeding filings for clients in either location are heard through the U.S. Bankruptcy Court for the District of Colorado.
Why Choose Wagner Law Office, P.C. For Your Student Loan Case
The firm has handled bankruptcy filings for clients in Centennial and Colorado Springs since 2007 and applies the current DOJ attestation standard directly to each case rather than relying on the older, harder-to-meet undue hardship precedent alone. A free consultation determines whether your loans and financial history meet the three-factor test before any filing begins.
If you live in Denver, Centennial, or Colorado Springs and are struggling with federal student loans, contact us online or call (303) 536-5124 today.
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