Yes, you can file bankruptcy on federal student loans, but it's not automatic. To "discharge" or erase student loan debt, you must file a separate lawsuit called an "adversary proceeding" alongside your Chapter 7 or 13 bankruptcy case and prove "undue hardship" at trial. (11 U.S.C. § 523(a)(8).)
The standard is demanding. You must show that you currently can't pay, and won't be able to pay in the future. This typically requires proof of a disability, chronically low wages, or other lasting financial hardship. That said, the process has gotten easier. New federal oversight by the Department of Justice (DOJ) has streamlined student loan discharge proceedings, reducing costs and making the outcome fairer for those who qualify.
In This Article
Can You File Bankruptcy on Student Loans?
Bankruptcy allows people overwhelmed by debt to erase credit card balances, medical debt, phone and utility bills, unpaid rent, personal loans, and more. But not all debts can be discharged. Support obligations and many tax debts are nondischargeable, meaning filers remain on the hook for them no matter what.
Student loans fall into the same nondischargeable category, with one exception: if you can prove that repaying them would cause undue hardship. That's a high bar, and historically, bankruptcy judges have granted student loan discharges only in extreme cases. Recent changes to the discharge process have improved the odds for those who genuinely qualify.
Recent Changes That Make Student Loan Discharge Easier
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In 2022, the Department of Justice and Department of Education jointly rolled out new guidance requiring the DOJ to objectively review whether a debtor qualifies for a student loan discharge. Before this, borrowers often needed to hire costly experts just to litigate their case, an ironic burden for people already too broke to repay their loans. The new process reduces that expense and signals that the federal government wants discharge within reach for more filers.
How to Qualify for Student Loan Discharge in Bankruptcy
Filing for bankruptcy doesn't trigger an automatic review of your student loans. The court assumes you'll keep paying them. If you believe you qualify for a discharge, you have to go after it yourself by filing a separate lawsuit, called an "adversary proceeding," against your loan servicer. At trial, you must prove all three elements of the undue hardship standard.
The Brunner Test: Undue Hardship Factors Explained
Most courts apply the Brunner Test, a three-part standard for determining undue hardship. Some circuits use a "totality of the circumstances" approach, but the practical result is similar. Your bankruptcy lawyer can advise you on any meaningful differences in your jurisdiction. Here's what you'll typically need to prove.
Present ability to pay. If you have enough money to pay your student loans, you won't clear this factor. You must show that your expenses meet or exceed your income. The allowed calculation figures are on the student loan attestation form, or you can ask your bankruptcy lawyer for more information.
Future ability to pay. Will your financial situation improve enough to allow you to repay the loan? If so, you won't meet this hurdle. Factors that support a future inability to pay include not holding a degree, being at or near retirement age, having a disability or chronic injury, a history of protracted unemployment, and having an extended repayment status. If none of those apply, the court will still consider any other relevant facts.
Good faith efforts. The court wants to see that you've made a reasonable effort to earn income and repay the loan. Contacting your lender about payment plans counts in your favor. Previous nonpayment won't automatically disqualify you, nor will failing to enroll in an income-driven repayment plan—as long as you can provide a valid explanation.
Who Is Most Likely to Qualify for Student Loan Discharge?
Every case is different, but certain circumstances consistently move the needle, with wage instability as the common thread.
Disabilities. If you have a permanent disability that prevents you from earning enough to cover living expenses and student loan payments, you'll likely qualify for discharge.
Low wages and high expenses. Sometimes the career a person trained for simply doesn't pay enough to cover modest living costs and loan payments. If you meet all other criteria and lack marketable skills, this situation may persuade a bankruptcy judge.
Age. Many retirees have successfully used bankruptcy to eliminate student loans and other debts—and exited without losing retirement assets, provided they planned ahead to ensure bankruptcy exemptions covered their property. Learn about the exemptions in your state.
Unemployment history. A stretch of unemployment alone probably won't be enough. But if you can show that your skills are no longer marketable—perhaps because of the rise of artificial intelligence or another structural shift—and that adequate employment is unlikely, you'll have a much stronger case.
Alternatives to Bankruptcy for Student Loan Relief
Filing for bankruptcy on student loan debt costs money, and there's no guarantee it will work. Before going that route, it's worth checking whether a federal program can do the job more efficiently. The most common starting point is switching to an income-driven repayment plan that lowers your monthly payment. See How to Get Out of Student Loan Debt for a breakdown of your options.
If you have a total and permanent disability, a separate federal program lets you apply directly through Federal Student Aid to eliminate the following loan types:
- William D. Ford Federal Direct Loan (Direct Loan) Program loans
- Federal Family Education Loan (FFEL) Program loans
- Federal Perkins Loans
- TEACH Grant service obligations (additional documentation required in some cases)
You'll qualify by providing disability documentation from the U.S. Department of Veterans Affairs (VA), the Social Security Administration (SSA), or an authorized medical professional. The process is significantly simpler and less expensive than bankruptcy. You'll find more about applying on the Federal Student Aid website. Another form of help includes student loan deferments for cancer patients.
How to File for Student Loan Bankruptcy Discharge: The Process
If nonbankruptcy options aren't available, discharging student loans requires you to file both a bankruptcy petition and an adversary proceeding requesting the student loan discharge. They are two distinct matters with different case numbers that will be handled simultaneously.
Chapter 7 vs. Chapter 13 for Student Loan Discharge
If your income is low enough to qualify for a student loan discharge, you'll likely also qualify for Chapter 7 bankruptcy. Take the Chapter 7 means test to confirm. Most people prefer Chapter 7 because it wraps up in about four to six months and doesn't require repaying creditors. The tradeoff is that it's a blunt instrument—it doesn't solve every financial problem.
Chapter 13 gives you more flexibility. Because it involves repaying creditors a portion of what you owe through a three- to five-year Chapter 13 plan, it can accomplish things Chapter 7 can't, like keeping a home out of foreclosure, preventing a car repossession, or paying down nondischargeable debts over time.
Even if you don't qualify for a student loan discharge, Chapter 13 may still help. You can likely pay a reduced amount toward student loans during the repayment period, giving you temporary breathing room. The catch: whatever balance remains when the plan ends is still yours to pay. And time spent in Chapter 13 won't count toward an income-driven repayment plan. A bankruptcy lawyer is the best person to help you weigh these options.
How to File a Student Loan Adversary Proceeding
You start the adversary proceeding by filing a complaint against your loan servicer. Along with the complaint, you'll submit a student loan attestation form that outlines your financial situation and student loan history. That's the document the DOJ uses to analyze your case.
The DOJ reviews the attestation form and your prior payment history, then prepares a discharge litigation report for the bankruptcy judge based on the undue hardship factors. You're entitled to a copy of that report—request it, and review it carefully before trial.
What Happens After Filing Bankruptcy on Student Loans
Bankruptcy is predictable, even if it feels overwhelming at first. Tens of thousands of people complete the process every year. Here's what to expect once you file, both in your Chapter 7 or 13 case and in the parallel student loan adversary proceeding.
Chapters 7 and 13 Bankruptcy Process
Paperwork and automatic stay. Once you file the bankruptcy petition, schedules, and supporting documents, an automatic stay immediately goes into effect. That halts most collection actions, creditors can't contact you for payment, continue lawsuits, or pursue wage garnishments while the case is active. (11 U.S.C. § 362.)
Appointment of the trustee. A bankruptcy trustee is assigned to review your financial documents and assess your assets. In Chapter 7, the trustee's main job is to sell any nonexempt property and distribute the proceeds to creditors who file timely proof of claims. In Chapter 13, the trustee collects your monthly payments and distributes them to creditors per the plan. You'll provide financial documents, or "521 documents," to the trustee early in the process.
Appearances. About 20–40 days after filing, every filer attends a "341 meeting of creditors." a brief identity verification and Q&A session with the trustee. Creditors may attend, but rarely do. Chapter 13 filers also attend a plan confirmation hearing a few months later, where the court approves the repayment plan if it meets l