Student loans are harder to discharge in bankruptcy than other debts, but it is possible under certain circumstances

You can file for bankruptcy while owing student loans, but the loans themselves usually will not go away. Federal student loans and most private student loans are treated differently from credit card debt or medical bills in bankruptcy court. To have student loans discharged — meaning erased — you must meet a legal test called the Brunner test or show undue hardship, depending on your loan type and which court hears your case. This is a much higher bar than straightforward owing money.

Bankruptcy will still affect your student loans even if they are not discharged. Your monthly payment obligations may be paused during the bankruptcy process, and in some cases a bankruptcy filing can help you move toward an income-driven repayment plan that lowers your monthly payment. But the debt itself typically remains after bankruptcy ends.

Key Takeaways

  • Student loans are rarely discharged in bankruptcy unless you can prove undue hardship, which requires showing that you cannot maintain a minimal standard of living while repaying them.
  • The Brunner test, used in many federal courts, requires three things: that you cannot pay and maintain a minimal lifestyle, that your situation is likely to continue, and that you have made a good-faith effort to repay.
  • Federal student loans and private student loans are treated similarly in bankruptcy court, though private loans may have slightly different rules depending on the lender.
  • Filing for bankruptcy pauses your student loan payments during the process and may open the door to income-driven repayment plans that lower your monthly obligation.

What the Brunner test requires

Most federal courts use the Brunner test to decide whether student loan debt counts as undue hardship. You must prove all three parts to succeed. First, you must show that based on your current income and expenses, you cannot afford to pay your student loans and still maintain a minimal standard of living. This is not about comfort — it is about basic necessities like food, shelter, and medical care.

Second, you must demonstrate that your financial situation is likely to persist for a significant portion of the repayment period. A temporary job loss or illness that you expect to recover from will not meet this test. The court wants to see evidence that your low income or high expenses are not temporary.

Third, you must show that you have made a good-faith effort to repay your loans. This means you have been paying what you could, or you have pursued income-driven repayment plans, deferment, or forbearance. If you have straightforward ignored your loans, the court will deny your request.

How bankruptcy affects your student loan payments during the process

When you file for bankruptcy, an automatic stay goes into effect. This is a court order that stops most creditors from collecting, including pausing collection calls and wage garnishment. For student loans, the automatic stay halts collection activity and pauses your monthly payment obligation while your bankruptcy case is active.

This pause is temporary. Once your bankruptcy case closes — usually after three to five years for Chapter 13 bankruptcy, or a few months for Chapter 7 — your student loan payments resume. The loans are not forgiven straightforward because you filed; they are only paused during the legal process.

During bankruptcy, you may also have the chance to move into an income-driven repayment plan if you have federal student loans. These plans cap your monthly payment at a percentage of your discretionary income, which can be as low as $0 per month if your income is very low. This is separate from the undue hardship test and may be available to you even if your loans are not discharged.

The difference between Chapter 7 and Chapter 13 bankruptcy for student loans

In Chapter 7 bankruptcy, you liquidate assets to pay creditors, and unsecured debts like credit cards are typically erased. Student loans are not erased unless you prove undue hardship in an additional proceeding called an adversary proceeding. You must file a separate lawsuit within the bankruptcy case to ask the court to discharge the student loans. Most Chapter 7 filers do not pursue this because the undue hardship standard is very difficult to meet.

In Chapter 13 bankruptcy, you create a repayment plan to pay back some or all of your debts over three to five years. Student loans must be included in this plan, but they are treated differently from other debts. You cannot reduce the amount you owe on student loans through the plan the way you can with credit card debt. However, Chapter 13 can still help by organizing your finances and potentially lowering your overall monthly obligations to creditors, which may free up money for student loan payments.

Private student loans and bankruptcy

Private student loans are treated similarly to federal loans in bankruptcy court — they are not automatically discharged. You must still prove undue hardship using the Brunner test or a similar standard, depending on your court. However, some courts have begun to explore a slightly more flexible test for private loans, recognizing that they lack the income-driven repayment and forgiveness options available for federal loans.

The key difference is that private lenders have fewer tools to collect if you default. They cannot garnish your wages without a court judgment the way the federal government can, and they have no access to tax refund offsets. This does not make discharge easier, but it may affect your overall strategy if you are considering bankruptcy.

Alternatives to bankruptcy for managing student loan debt

Before filing for bankruptcy, explore whether income-driven repayment plans, loan consolidation, or public service loan forgiveness might lower your payments without the long-term credit damage of bankruptcy. Federal student loans offer several repayment options that can reduce your monthly obligation based on your income, and some borrowers become may be able to access for forgiveness after 20 to 25 years of payments.

If you have federal loans, contact your loan servicer to discuss income-driven repayment plans such as SAVE, PAYE, IBR, or ICR. These plans can lower your payment to as little as $0 per month if your income is below the poverty line. You can also explore whether you are may be able to access for Public Service Loan Forgiveness if you work for a government agency or nonprofit organization.

Bankruptcy should be considered only after you have exhausted these options and determined that your financial situation truly meets the undue hardship standard. A bankruptcy attorney can review your specific circumstances and advise whether filing makes sense for your situation.

What happens to your credit and future borrowing after bankruptcy

Bankruptcy stays on your credit report for seven to ten years, depending on the chapter you file. This affects your ability to borrow for a car, home, or credit card during that time. Student loans, however, will remain on your credit report even longer — typically until they are paid off or discharged.

If your student loans are not discharged in bankruptcy, they continue to accrue interest and appear as a debt on your credit report. Your credit score will recover faster from the bankruptcy itself than from the ongoing student loan debt, especially if you make payments on time after bankruptcy ends.

Frequently Asked Questions

Will filing for bankruptcy stop my student loan payments when ready?

Yes, the automatic stay that begins when you file for bankruptcy pauses your student loan payments and stops collection activity. However, this pause is temporary and lasts only while your bankruptcy case is active. Once your case closes, payments resume unless your loans were discharged.

How often do people get student loans discharged in bankruptcy?

Discharge is rare. Most courts report that fewer than one percent of bankruptcy filers attempt to discharge student loans, and an even smaller percentage succeed. The undue hardship standard is intentionally strict, and courts are skeptical of discharge requests.

Can I discharge only some of my student loans in bankruptcy?

No. If you prove undue hardship, all of your student loans are typically discharged together. You cannot choose to discharge some loans and keep others. However, you can include some loans in bankruptcy and exclude others if they are held by different entities, though this is uncommon.

What counts as a good-faith effort to repay under the Brunner test?

Good-faith effort usually means you have been making payments when you could, even if they were small, or you have pursued income-driven repayment, deferment, or forbearance. straightforward ignoring your loans or refusing to explore repayment options will disqualify you from discharge.

Do I need a lawyer to file for bankruptcy with student loans?

You can file for bankruptcy without a lawyer, but the process is complex, especially if you plan to pursue an adversary proceeding to discharge student loans. Many bankruptcy courts require or strongly recommend legal representation for undue hardship cases. A bankruptcy attorney can evaluate your situation and advise whether discharge is realistic for you.