Student loans enable Texas residents to attain their educational goals. However, students often struggle to pay these loans back. Nationwide, borrowers owe $1.5 trillion in student loan debts, and bankruptcy law specifically prohibits the discharge of student loans unless a borrower can show undue hardship.
The federal court system has not established a standard way to assess undue hardship, but courts typically apply the Brunner test when considering factors. Essentially, this test looks at extenuating circumstances and a person's good faith attempts to resolve the debt. If payments make the maintenance of a minimum standard of living impossible and the person has tried to make payments, then a court might view the situation as an undue hardship. Age, income and health could influence this decision.
A bankruptcy case that pursues a hardship discharge of student loans must include a special lawsuit within the bankruptcy court known as an Adversary Proceeding. This court filing should describe how the student loan payments undermine the quality of life. A successful Adversary Proceeding could enable relief from both federal and private student loans.
Due to the barriers to discharging student loans, a person struggling under the stress of these debts might want the insights of an attorney. A lawyer could determine the viability of proving undue hardship. Legal counsel might also determine that other debts from credit cards or medical bills could be discharged with a Chapter 7 bankruptcy. To pursue these goals, an attorney could organize the person's financial disclosures and prepare all filings for the court. If the court has questions, the lawyer could manage responses and strive to gain a favorable ruling.