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Bankruptcy May Be Your Option

Can I discharge my student loans through bankruptcy?

Yes, but it is extremely difficult to do so. Declaring bankruptcy does not automatically discharge your student loans. In fact, federal law prohibits student loans from being discharged through either Chapter 7 or Chapter 13 bankruptcy except in very rare circumstances. Student loans may be discharged only when the loans pose an “undue hardship” on the borrower.

Proving an undue hardship is not easy to do, in part because the law does not specify what an undue hardship is. In Oklahoma, courts use the Brunner test to determine whether the circumstances qualify as an undue hardship. Under the Brunner test, you must prove three things in order for your student loans to be discharged. You must be able to show that:

1)    You, based on your current income and expenses, would not be able to meet a minimal standard of living if you are forced to repay the student loan;

2)    The hardship is likely to continue for a significant portion of your loan repayment period; and

3)    You already made good faith efforts to pay your loans back.  

If you fail to meet any one of these three prongs under the Brunner test, your loans will not be discharged. Whether you can meet this high standard depends on the facts of your particular case. However, you should know that many people are unable to meet this standard.

If you are struggling with debt, consider speaking with an experienced bankruptcy attorney. Although discharging student loans may not be a viable option for you, there may be other things you can do to help relieve the burden. 

Source: Studentaid.ed.gov, “Forgiveness, Cancellation, and Discharge,” Accessed June 7, 2015 

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