Are Student Loans Dischargeable in Bankruptcy? – San Diego Bankruptcy Attorney

MP900387492 (1) As a general rule of thumb, most bankruptcy attorneys will tell their clients that student loan obligations are nondischargeable in bankruptcy.  While this is true in the majority of instances, it is not always the case.  In certain scenarios, student loan obligations can be discharged in bankruptcy.

Pursuant to the United States Bankruptcy Code, educational loans are not dischargeable unless they would impose an undue hardship on the debtor and the debtor’s dependents.  The Ninth Circuit currently has adopted a three-part test to determine whether an educational loan would impose an “undue hardship”:

  1. The debtor must establish that he or she cannot maintain, based on current income and expenses, a “minimal” standard of living for himself or herself and his/her dependents if forced to repay the loans;
  2. The debtor must show that additional circumstances exist indicating that the debtor’s state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and
  3. The debtor has made good faith efforts to repay the loans.

The Ninth Circuit currently requires that a debtor meet all of the above elements in order to find a student loan dischargeable.  While debtors often meet the first prong of the above test, it is typically more difficult to fulfill the other two elements.  “Additional circumstances,” for purposes of the second element, may include limited education, mental or physical disability, or other serious circumstances which show that a debtor’s financial affairs are unlikely to improve.  Factors which a Court may look at in determining whether a debtor has made a good faith effort to repay the student loans are (i) whether he/she has sought employment and attempted to maximize income and minimize expenses; and (ii) sought to enter into a repayment plan for the student loan obligations.

At the end of the day, the question of dischargeability of student loan debt is a case-by-case analysis, depending on your specific circumstances.  If you have any questions or to find out if your student loan obligations might be dischargeable in bankruptcy, please contact the VC Law Group at (858) 519-7333 or email at