Although it is possible for one to discharge their student loan payments, it is very difficult to do so and rarely happens. In order for you to attempt to discharge your loans you must first file a Complaint to Determine Dischargeability with a bankruptcy court. Once you have done this you can either try and represent yourself or hire an attorney to represent you (which is recommended) in proving it would be an undue hardship for you to pay back your student loans. The courts will then use one of few tests to decide whether or not it is truly an undue hardship for you. Two of the more popular choices of tests are the Brunner Test and the Totality of the Circumstances Test.
In order to prove undue hardship under the Brunner Test, you must meet all three of its requirements. The first requirement is that you prove you and your dependents will not be capable of living within the basic standard of living if you must pay back your loans. The court will look at your current income and your monthly necessary expenses (groceries, rent, etc.) to determine whether or not the addition of paying off your student loans would push you below the standard of living. The second requirement is whether or not your financial situation will stay consistent for a majority of the time spent paying off your student loans. If it doesn’t look like you’re financial situation will improve at any time during the period of repayment, you may be able to discharge the loans. The final requirement for this test is to prove that you had made an honest effort in trying to pay off your student loans.
Under the Totality of the Circumstances Test there are no requirements that you must reach like the previously mentioned test. However, the court will look at similar factors to determine whether or not paying back your loans will be an undue hardship for you. Instead of just looking at the three previously mentioned areas (possibility of poverty, consistency of financial situation, and honest effort), they will look at all possible factors that are pertinent to your case specifically. Keep in mind that the court systems are not limited to these two tests alone, there are other tests that can be used by the courts. If you’re unsure of what test will be used in your area, get in touch with a local bankruptcy attorney to find out.
One thing to keep in mind is that most courts will either discharge all of your loans or they won’t discharge any at all. There are few courts that will only discharge a percentage of your student loans. If your loans aren’t discharged, two things could happen. If you filed under Chapter 7 bankruptcy, you will have to repay your loans back as previously planned. You could call the facility your loan is through, though, and ask to lower your monthly payment. If you filed under Chapter 13, you may have more options open to you in terms of lowering your monthly payment other than just calling the facility. However, you must keep in mind that even when your monthly payments have been reduced, after the original time period has passed for you to complete payments you need to pay off whatever is left. So if you were on a 10 year payment plan and had your payments reduced, by the time the 10 years is up you will have money left over to pay still (ex. $500 left over). With that being said, just remember to keep all of your options open before filing a Complaint to Determine Dischargeability, such as speaking with a loan counselor.