The Truth About Bankruptcy and Student Loans

If you’re buried in student loan debt, you’re not alone. Millions struggle to keep up with monthly payments, especially when other bills pile up. You may have heard that bankruptcy can’t wipe out student loans. While that’s often true, the whole picture is more complicated—and more hopeful—than most people realize.

Let’s clarify some common myths and explain what bankruptcy can do when student loans are part of your financial stress.

Can You Discharge Student Loans in Bankruptcy?

Yes, it’s possible—but it’s not automatic.

Unlike credit cards or medical bills, student loans don’t get discharged just by filing for bankruptcy. Instead, you need to take an extra step called an adversary proceeding. This is a separate lawsuit, filed within your bankruptcy case, where you ask the court to erase your student loans.

In Florida, just like in the rest of the country, the court uses a specific test to decide whether your loans can be discharged.

What’s the “Undue Hardship” Test?

To wipe out student loans in bankruptcy, you must prove undue hardship. This is the biggest hurdle, and it’s why so many people believe it can’t be done.

Most courts—including those in Florida—use what’s known as the Brunner test, which looks at three things:

1. You can’t maintain a basic standard of living if forced to repay the loans
2. Your financial situation isn’t likely to improve anytime soon
3. You’ve made a good-faith effort to repay the loans

This is a strict standard, but not impossible. If you’re disabled, underemployed despite trying, or facing long-term hardship, you might qualify.

Bankruptcy Can Still Help, Even If Loans Aren’t Discharged

If your student loans don’t qualify for discharge, bankruptcy may offer relief.

Chapter 7 wipes out most unsecured debts—like credit cards, medical bills, and personal loans. Once those are gone, you can afford your student loan payments again.

Chapter 13 sets up a repayment plan based on your income. Your student loan payments can be paused or reduced during this time, often for three to five years. This break may give you time to get back on your feet or qualify for loan forgiveness programs.

Recent Changes May Help More People Qualify

There’s growing recognition that the old rules around student loans and bankruptcy must change. In 2022, the U.S. Department of Justice and the Department of Education announced new guidelines that make the process more transparent.

If you file an adversary proceeding, the government may work with your attorney to review your financial situation fairly. They’ll consider your current and future income, past efforts to pay, and whether hardship is likely to continue. This new process may increase your chances of success.

While the courts still make the final decision, this shift signals hope for previously shut-out borrowers.

Should You Try to Discharge Student Loans?

It depends on your situation.

If you’re facing long-term hardship or disability, it may be worth pursuing. But even if you don’t meet the undue hardship test, bankruptcy could offer real benefits by reducing your debt burden.

Speaking with a bankruptcy attorney who understands the process and the latest changes is essential. This isn’t something you should try to figure out on your own.

Don’t Make These Common Mistakes

If you’re dealing with student loan debt, avoid these pitfalls:

• Don’t stop paying altogether without a plan. That can hurt your credit and lead to wage garnishment.
• Don’t assume bankruptcy won’t help. You may not be discharged from the loans, but you can improve your situation.
• Don’t go it alone. The rules are complex, and legal guidance makes the process more straightforward.

Take the First Step Toward Relief

Dealing with student loans can feel hopeless, but you have options. Bankruptcy may not erase every debt, but it can give you space to breathe and plan for a better future.

If you’re overwhelmed and not sure where to turn, we’re here to help. We’ll walk you through your options and help you understand how bankruptcy fits into your bigger financial picture.

Reach out to schedule a consultation with the Law Offices of Robert M. Geller. No pressure—just honest advice and support from a team that understands what you’re going through.