As Kentucky residents turn to bankruptcy to start fresh and receive relief from smothering debt, it is important to know if student loans are discharged during bankruptcy. Unfortunately, many are unaware that getting rid of student loans requires more than just a Chapter 7 or Chapter 13 bankruptcy filing. It may require that you prove there is an “undue hardship” caused by the repayment process.

Nerdwallet reminds consumers that it is not impossible to discharge student loans with bankruptcy, but it is more complicated than wiping out credit card debt and other payments. There are financial impacts and costs associated with bankruptcy, so consumers should understand what it takes to get rid of student loans before they make the right decision.

There is something called the Brunner test that is used to determine if student loan payments create an undue hardship on an individual. This test includes the three following parts:

  • You are unable to maintain a minimal living standard with your current expenses and income if you are paying student loans
  • Physical or mental disabilities, poor-quality education or a maxed-out level in your profession are just a few examples of what may make it unlikely that your financial situation will improve soon
  • You have also made serious efforts to repay your loans during the time you had them

Student loan bankruptcy is most likely to be the right option when all other payment options have been exhausted, you are past due on your student loan payments and you have no other way to default on your loans. There is no guarantee that you will receive relief from your student loans through this process, but a bankruptcy attorney can help you increase your chances.

This is for educational purposes and should not be interpreted as legal advice.