The Cassidy Law Firm Blog

Monday, January 5, 2015

Are Student Loans Dischargable in a Chapter 7 Bankruptcy?

College and graduate school can become very expensive over time. After years of education and a tough economic climate, debts can accumulate quickly, especially if you have student loans to repay. It is no surprise that many young people explore bankruptcy as a way to help alleviate some of the debts they have acquired.

Student loans cannot be discharged unless undue hardship is proven. Many courts use the Brunner test which uses three factors to demonstrate undue hardship. These three factors: poverty, persistence, and good faith must all be proven.

  • Current income and expenses are used to determine that you cannot maintain a minimal standard of living while repaying student loans.
  • You must prove that your economic conditions are not likely to change anytime soon.
  • You must also demonstrate that you have been acting in good-faith and have made an effort to repay your student loan debt. Some people fail the good faith criterion because they have not tried to find work or cannot prove they have taken their obligation to repay the student loan debt seriously.

If a Bankruptcy Court finds that the Brunner test factors have been satisfied, the Court may allow you to discharge your student loan debt in a Chapter 7 Bankruptcy . Sometimes the entire loan is forgiven. In other situations, the Court may rule that only a portion of the debt can be discharged.

If you have questions about the bankruptcy process or about how a bankruptcy an affect a cosigner, contact an experienced Monmouth County bankruptcy attorney at The Cassidy Law Firm.  At The Cassidy Law Firm we pride ourselves on giving all of our clients the time and personal attention needed to provide them with the legal services they deserve.  We offer free no commitment consultations.  Contact us today to speak with an experienced attorney and get your free consultation.  We are located in Shrewsbury, New Jersey and we service all of Monmouth County including Long Branch, Eatontown, Red Bank, Middletown, Asbury Park, Colts Neck and all of Ocean and Middlesex Counties.


*We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

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