You’ve probably heard the myth. Everyone says you can't get rid of student loans in bankruptcy. It’s basically common knowledge at this point, right? People tell you it’s "impossible" or that you have to be literally dying to even try. Honestly, that’s just not true anymore.
Things changed.
The reality of undue hardship student loan discharge is much more nuanced than the horror stories you see on Reddit. While it’s definitely not as easy as wiping out credit card debt, the Department of Justice (DOJ) and the Department of Education actually issued new guidance in late 2022 that makes the process way more predictable. They finally realized that the old way of fighting every single borrower was a mess.
If you are drowning, you need to know how this actually works in a courtroom, not just what you heard from a cynical friend.
The Brunner Test is the Gatekeeper
Most people who look into this end up staring at a legal term called the "Brunner Test." It sounds like something out of a mid-century medical textbook. It actually comes from a 1987 case, Brunner v. New York State Higher Education Services Corp.
To get an undue hardship student loan discharge, most courts require you to prove three specific things. First, you can't maintain a "minimal" standard of living if you're forced to repay the loans. We aren't talking about skipping a vacation. We're talking about basic utilities, food, and rent. Second, your financial situation has to be likely to persist for a big chunk of the repayment period. This is the "certainty of hopelessness" part, though the DOJ has softened how they look at this recently. Third, you have to show you've made a "good faith effort" to repay.
It's a high bar. But it's not a brick wall.
Some circuits, like the First and Eighth, use the "Totality of the Circumstances" test instead. It’s a bit more flexible. It looks at your whole life—your health, your dependents, your actual income potential—without being quite so rigid about the three-part Brunner structure. If you live in a state covered by these circuits, your odds might actually be slightly better because the judge has more room to be human.
👉 See also: Afghanistan Currency to PKR Explained: Why the Exchange Rate is Doing This Now
How the 2022 DOJ Guidance Flipped the Script
For decades, if you tried to discharge your loans, the government would send a lawyer to fight you tooth and nail. They would argue that if you could afford a Netflix subscription, you weren't "suffering" enough. It was brutal.
Then came the November 2022 memorandum.
This was a massive shift. The government basically told its lawyers to stop being so aggressive. They created a standard "Attestation Form" that borrowers fill out. If your expenses match up with the IRS National and Local Standards—the same ones used for other tax issues—the DOJ is now much more likely to stipulate to the hardship.
Basically, if the numbers show you’re broke and unlikely to stop being broke, the government lawyer might just agree with you instead of cross-examining you about your grocery bill. This saves everyone time. It also makes the undue hardship student loan discharge accessible to people who can't afford a $500-an-hour bankruptcy litigator.
Why "Good Faith" is the Tricky Part
The government still looks closely at your history. Did you try an Income-Driven Repayment (IDR) plan? If you just ignored your loans for ten years and never even checked if you qualified for a $0 payment, a judge is going to have questions. Good faith doesn't mean you paid a lot of money; it means you tried to work with the system before you gave up.
If you've been in default for a decade but never applied for help, you might have a problem. But if you were on a plan and your life still fell apart? That's a strong case.
Real Examples of Who Actually Wins
It’s easy to think this is only for people with permanent disabilities. While that is a major category, it isn't the only one.
Take the case of Wolfson v. DeVos. The borrower had chronic health issues that didn't technically qualify as a "total and permanent disability" under Social Security rules, but they were enough to keep her from working a high-paying job. She won. Or look at older borrowers. If you are 62, have $100,000 in debt, and work a minimum-wage job, the court is increasingly likely to realize you aren't going to have a sudden career surge in your 70s.
👉 See also: 1 Kuwaiti Dinar to Egyptian Pound: Why the Exchange Rate is Shifting Right Now
Age matters. Health matters. Even the type of degree matters. If you spent $80,000 on a degree from a school that lost its accreditation or was shut down for fraud, judges tend to be way more sympathetic.
The Adversary Proceeding: The Step Nobody Likes
You can't just check a box on your standard bankruptcy petition and expect your student loans to vanish. It doesn't work that way. You have to file what’s called an "Adversary Proceeding."
Think of it as a lawsuit within your bankruptcy.
It’s an extra step. It costs more in filing fees. It requires a separate set of documents. This is where most people get stuck because it feels intimidating. You are literally suing the Department of Education to prove your life is hard enough to merit a discharge.
But here is the secret: since the 2022 guidance, many of these cases are settling before they ever get to a trial. If your Attestation Form is solid, the DOJ lawyer might offer a partial discharge. Maybe they won't wipe out all $50,000, but they might agree to wipe out $40,000 and leave you with a manageable $10,000.
A partial undue hardship student loan discharge is still a massive win.
The "Tax Bomb" and Other Things to Worry About
Usually, when debt is forgiven, the IRS treats it as income. If you have $100,000 forgiven, the IRS might show up asking for taxes on that "income."
However, debt discharged in bankruptcy is generally not taxable. This is a huge advantage over programs like Public Service Loan Forgiveness (PSLF) or IDR forgiveness (though the American Rescue Plan has temporarily paused taxes on those through 2025). If you get your discharge through an adversary proceeding, you usually walk away clean. No surprise tax bill at the end of the year.
Myths That Keep People in Debt
- "I have to be on Social Security Disability." No. You just have to show that your current income can't cover basic needs and isn't likely to change.
- "Private loans can't be discharged." Actually, private loans are sometimes easier to discharge because the DOJ guidance doesn't apply to them—meaning they don't have the same administrative hurdles if the lender decides not to fight.
- "Bankruptcy ruins your life forever." It stays on your credit report for 7 to 10 years, sure. But if you’re already in default, your credit is probably already hurting. Clearing the debt can actually let you start rebuilding.
Actionable Steps to Take Right Now
If you're considering pursuing an undue hardship student loan discharge, don't just jump into a filing. You need a paper trail.
Gather your evidence first. You need five years of tax returns, pay stubs, and a very detailed list of monthly expenses. If you have a medical condition, you need letters from doctors—not just a note saying "they're sick," but a detailed explanation of how the condition limits your ability to earn money.
Check the IRS National Standards. Look up what the IRS considers "allowable" expenses for your family size and zip code. If your spending is way above those numbers (like a $800 car payment), you’ll need a very good reason why that expense is "necessary."
Consult a Bankruptcy Attorney who actually does student loans. Many bankruptcy lawyers just want to do "no-asset Chapter 7s" because they're easy. They might tell you student loans are impossible because they don't want to do the extra work of an adversary proceeding. Find someone who mentions the 2022 DOJ Guidance on their website. They are the ones who actually know the current landscape.
Apply for an IDR plan today. Even if you can't pay a dime, getting on a $0-a-month plan shows the "good faith" the court looks for. It proves you tried to use the tools the government provided before asking for a discharge.
The door isn't wide open, but it's definitely unlocked. For the first time in decades, the government is actually providing a roadmap for people who are truly stuck. It’s a lot of paperwork, and it’s a bit of a grind, but for thousands of borrowers, it is a legitimate path out of a lifelong debt trap. Be meticulous with your records and don't let a lawyer who hasn't read the news since 2010 tell you it can't be done.