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Student Loans are a Nightmare

For many years, Congress has made it nearly impossible to discharge student loans. The premise was that anyone who takes out a student loan should not be able to discharge that loan and essentially get a “free” education paid by taxpayers. However, that premise created a firestorm of colleges and universities steadily raising tuition rates due to many factors within the college system. It has gotten to a point now where the costs associated with getting a college degree have become more expensive than the degree is worth. For so many people, getting a job after college that allows them to not only pay for their student loans but also to make a decent standard of living has become so challenging that we often wonder whether getting the education was the right decision. Today’s job market is hypercompetitive, and salaries are not keeping up with the demand. But what if you could discharge your student loans in bankruptcy? For many, it could be the fresh start they need to recover from insurmountable debt. 

How Do I Know If I Can Discharge My Student Loans?

In Arizona, the bankruptcy court follows the Brunner  test. Brunner was a bankruptcy case filed in the 1980’s in which a bankruptcy filer asked the court to discharge his student loans. The court held that a test was needed to determine dischargeability of student loan debt. (See, Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2d Cir. 1987). The test consists of three factors to determine whether your student loan debt is dischargeable:

  1. the debtor cannot presently maintain a minimal standard of living if required to repay the student loan,
  2. circumstances exist that indicate the debtor’s financial situation is likely to persist into the future for a significant portion of the loan repayment period, and
  3. the debtor has made good faith efforts in the past to repay the student loan.



For many people, getting past the first prong of the test is the most difficult. Most student loan servicers will argue that if the debtor has any type of employment, then the debtor has the ability to pay “something” towards the loan even if it’s on one the government’s student loan repayment plans. However, the Biden Administration has relaxed on some of these standards which may help some people discharge student loans.

The focus is changing more towards the second prong of the test, which indicates whether the debtor will be able to pay anything significant towards the student loan debt in the future. This test helps those debtors who either have been unable to find work in the job sector for which they have a degree, are underemployed in their job sector, or have been duped by for-profit schools leaving them with a degree which makes it hard to find work in their employment sector. For these debtors and others who are struggling with unsurmountable debt, dischargeability is easier than ever before. 

What Does It Take to Get A Discharge of My Student Loan Debt?

First, we must determine which chapter of bankruptcy is best for you or what chapter you qualify to file. Once your case is filed, you need to file a separate lawsuit within your bankruptcy called an Adversary Proceeding. In this lawsuit, you will make a claim for dischargeability of your student loan debt by proving that you pass all three of the above prongs for the Brunner test. In this proceeding, the government has made the process easier by allowing facts to be stipulated through a form provided by the government. You enter information about your employment and monthly expenses. These numbers help the court and the student loan servicers see what your ability to pay on your debt looks like. The student loan servicers will provide the government and the court with a history of your prior student loan payments and other events like forbearance or consolidation. The government will take a position as to whether they agree on discharge or a recommendation for full or partial discharge or interest rate reduction to help you. However, it all comes down to the bankruptcy court and the judge’s ruling. If the judge believes you have proven your case, then you will get a discharge. 

If you are burdened with student loans with little to no ability to make those payments for the foreseeable future, and you have done your best to make good on the loans, then bankruptcy might be what you need to get a discharge of your student loans. And if your student loans are not discharged, getting rid of other debt may help you free up cash to make those pesky student loan payments. Either way, let’s talk about your case and see if you might qualify. Give me a call today at 623-777-4760 or visit us at www.gaudiosilaw.com for more information.