There is a common misconception that overwhelming student loan debt cannot be discharged when filing for bankruptcy protection.

While it is more challenging than erasing other types of debt, it is possible to discharge private and federal student loans – but it requires an extra step.

How the process works

First, consult an experienced bankruptcy attorney who can help you determine whether Chapter 7 or Chapter 13 is the best option. The next two steps are:

  • Filing for bankruptcy: Before addressing student loan debt, you must file for Chapter 7 or 13. If you already filed but didn’t include student loans, you can reopen the case and argue for their discharge as well.
  • Begin an adversary proceeding: Forgiving student loans through bankruptcy means filing an additional lawsuit, known as an adversary proceeding. Your lawyer will write a complaint outlining your argument to have the debt discharged.

Proving “undue hardship”

For erasing student loans, you must prove that they present an undue hardship to your financial well-being. U.S. Bankruptcy Code doesn’t clearly define what that means, but most courts use the “Brunner test” to determine whether your argument is valid. The test contains three elements:

  1. Continuing to pay loan payments keeps you from having a “minimal” standard of living
  2. Circumstances exist making it likely that your economic hardship will remain for at least a significant portion of your remaining loan repayment term
  3. You’ve made a “good faith” effort to repay your loans

To be successful, you must prove all three parts of the Brunner test.

Determining whether to file

While it’s possible to have these debts forgiven, develop a strategy with your attorney and whether you’ve already explored all other payment options. While dismissing student loan debt is more complicated, it’s not impossible. A 2012 study in the American Bankruptcy Law Journal found that of 207 cases including student loans, 39% won a full or partial discharge.