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Can you declare bankruptcy for student loans?

There is a genuine student loan crisis happening in the United States. Many millennials going to college take out tens of thousands of dollars' worth of loans, and they are generally unable to pay them off. The federal government has attempted to reduce this hardship through student loan forgiveness programs and caps on interest accrual. 

Bankruptcy is the process by which a court discharges certain debts. It is a great way for people inundated with medical or credit card debt to find relief. However, bankruptcy typically does not discharge student loan debts because those fall into a different category. 

Is it possible?

Technically, it is possible for bankruptcy to eliminate student loan debt. However, the court must first find that paying off the student loans would cause an undue hardship on the individual. This can be an extremely difficult process to pass, and most college graduates will not qualify. A judge will look at your circumstances and apply the Brunner test. 

The Brunner test is a system used to determine if the person would have undue hardship paying off the loans normally. The person in debt must show he or she and all dependents will be unable to maintain a basic standard of living with the debt looming overhead. The person must show these repayments have created an undue hardship. The person must also show he or she has made payments on the loans over the years. 

Are there other options?

Most people do not pass the Brunner test. Instead, they make small payments on their student loans, so it does not necessarily create an undue hardship for a lot of graduates. However, if you want to try to discharge student loan debt, then you can look into loan forgiveness programs. If you believe that you pay too much each month on your loans, then you can try to set up an income-driven repayment plan. 

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Lakewood, CO 80228

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