For years, most people heard the same thing about student loans: “Bankruptcy won’t help.” That’s not entirely wrong, but it’s incomplete. Student loans differ from credit cards and medical bills and aren’t automatically discharged in Chapter 7 or 13 bankruptcy.
Still, there is a legal path to discharge some student debt in bankruptcy, and recently, the federal loan process has become more structured and realistic for qualifying borrowers.
This article outlines concrete actions a Massachusetts filer can take to assess student loan discharge possibilities and know what to expect during bankruptcy.
Why Student Loans Are Different in Bankruptcy
Most student loans are non-dischargeable unless not doing so creates “undue hardship” for the borrower and their dependents. In other words, bankruptcy won’t automatically erase student loans like other unsecured debts. You must take an extra legal step and meet a higher standard.
That’s why people often feel discouraged after consultations. They’ve heard “it can’t be done,” when a more accurate statement is, “it’s harder and requires a separate process.”
What “Undue Hardship” Really Means
The Bankruptcy Code uses the term “undue hardship,” but it does not define it in a simple checklist. Courts have developed tests over time. Outcomes depend on your facts, your documentation, and the court’s analysis.
Most borrowers who have a viable case share a few common traits:
● Their budget is already stripped down and still doesn’t work.
● Their situation isn’t likely to improve meaningfully over the repayment period.
● They have a history of making good-faith efforts, even when payments were inconsistent. This is because the money simply wasn’t there.
The key is that “hardship” isn’t “this payment is annoying.” It means the debt prevents you from maintaining a basic standard of living, and it isn’t temporary.
The Process Is An “Adversary Proceeding”
To ask the court to discharge student loans, you typically must file an adversary proceeding. This is a lawsuit in the bankruptcy case, started by filing a complaint. The court then determines whether the student loan debt is dischargeable.
This sounds intimidating, but it’s just the legal tool for these disputes. That’s why student loan discharge doesn’t happen automatically in bankruptcy. You must raise the issue directly.
A Newer, More Structured Path for Federal Student Loans
In late 2022, the Departments of Justice and Education issued guidance. This guidance aims to make federal student loan discharge litigation more consistent and less unpredictable. It includes the use of an attestation process in appropriate cases. The U.S. Trustee Program also hosts links to this guidance and related documents, including the attestation form.
Federal student loans are not suddenly “easy” to discharge; the undue hardship standard remains. What’s changed is that there is a clearer way to evaluate cases and sometimes resolve them more quickly than before.
If your student loans are private rather than federal, the same general legal standard applies. The process can look different because you are dealing with private lenders and their litigation posture.
What Bankruptcy Still Does Even If Loans Aren’t Discharged
Even when student loans aren’t discharged, bankruptcy can provide relief. Chapter 7 eliminates other debts, freeing up your budget for student loan payments. Chapter 13 creates a repayment plan for other debts and stops collection while the case is active.
If you are exploring an adversary proceeding, having the rest of the debt picture cleaned up can help. It clarifies the “undue hardship” analysis. The court can see your finances without the noise of other unsecured bills.
What To Gather Before You Talk to An Attorney
Gather the following key information before speaking to an attorney to prepare for the conversation:
● A list of your loans (federal vs private, servicer names, approximate balances)
● Recent statements or a summary printout
● Your current income information and basic monthly budget
● Notes on major life factors that affect earning ability (health issues, disability, caretaking responsibilities)
● Any recent repayment plan paperwork, if you have it
This isn’t about building a perfect case by yourself. It’s about saving time and helping your attorney identify if this is a “possible” or “not likely” conversation.
A Realistic Way to Think About It
Student loan discharge in bankruptcy is not a casual add-on. It is a separate fight that only makes sense when the facts support it. For the right borrower, it can be the difference between a fresh start and a debt that follows you indefinitely.
If you’re in Massachusetts and considering bankruptcy, the most useful step is to review your full debt picture, budget, and whether undue hardship is realistic under current guidance.
Speak with an Experienced Bankruptcy Attorney in Massachusetts
Hines Law is a bankruptcy law firm in Massachusetts that provides guidance and sound advice for you to choose the best solution to handle your overwhelming debt. Our bankruptcy attorneys have extensive experience in navigating bankruptcy laws so that you are protected and able to rebuild your finances and life.
Don’t know where to begin? Call one of our bankruptcy law firm locations throughout the Greater Boston area today to schedule a Free Consultation.