When someone considers the option of going bankrupt, they are definitely in the most difficult situation and they cannot pay off their debts. However, when it comes to student loans, we have often heard that it cannot be discharged through this process. Well, it is high time that we start understanding student loans and bankruptcy in combination so that one can analyze if it is an option that they should go with or not.

Student loans can be discharged through a bankruptcy case by proving ‘Undue Hardship’ and this is one of the reasons why people get confused because the process itself is not that clear. While you know that this is what you need to prove in court, there is no set of rules which every court and judge has to abide by. Hence, most people are unaware when the question arises that ‘how to prove undue hardship for student loans?’

As stated, there is no set of rules, but we do know that if not all, at least most of the judges do follow a specific test, i.e. the Brunner test to determine whether someone is applicable for student loans and bankruptcy or not. We will now look at the 3 major things that the borrower needs to prove to pass the Brunner test on which the decision of the judge relies.

Minimum Standard of Living

The first and foremost thing that you need to prove in a court is that if you were to repay the loan amount, you will not be able to maintain the bare minimum standard of living for yourself and those dependent on you. Now, it is not necessary that only people who fall under the poverty line would qualify for this. However, it depends on the judge who is handling your case and what they think about your current living conditions.

Additional Circumstances

There can be additional living conditions for you or people that are dependent on you that can add on to the fact that you cannot earn more and pay your student loan. This can include any mental or physical illness, poor quality of education, and the fact that you have reached the highest-earning that you can make and are still incapable of generating enough money.

Good Faith

The last point which is also very significant is that the judge should know that you have tried your best until now and that bankruptcy is the only option left. For example, you can ask for a repayment plan with less interest rate before you apply for bankruptcy to show the legitimacy of your intentions.

While the Brunner test is followed by most courts, it is not a set standard and so you need to consult a lawyer in your area beforehand to have enough knowledge about this and other things such as the need of filing the adversary proceeding, knowing which option is better for you, i.e. bankruptcy chapter 7 or 13, and to have an estimate of how much will the bankruptcy itself will cost you!

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