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Fear not the Difficulty of Discharging Student Loans in Bankruptcy

True or false? Discharging a student loan in bankruptcy is insanely difficult. If you answered, you’re correct.


Because perception is often reality, and the perception is that discharging student loans in bankruptcy is difficult, most folks believe this, attorney and non-attorneys alike. Thus, few ever attempt to discharge student loans via bankruptcy.


The fact is, the right debtor, with the right circumstances can discharge their student loans easily enough through bankruptcy. The better fact is, Judges are asking, even begging, for some of these cases. They see cases ripe for discharge, but are unable to say a word because of their position. What does that mean? It means we all need to seriously reconsider why we fear the difficulty of discharging student loans in bankruptcy.

Difficulty based on Type of Loan


Federal loans are difficult to discharge in bankruptcy because of the discharge test and how Judges choose to interpret it. To oversimplify the test, does your student loan payment present an undue hardship? Can you survive while making student loan payments? Key word – survive. It’s not about affording your triple skinny latte on your way to work. It’s about affording a car (basic, not luxury) to get to work. Federal loans have flexible, often affordable repayment options. For those with low income, it is possible to have a payment as low as $0 (ZERO!). Many Judges look at the short-term zero payment and rule against the debtor because there is no way a person cannot afford a zero dollar payment. The more astute Judges look at the long-term, the eventual taxable forgiveness, as a factor. These Judges realize that the taxable amount will likely be unaffordable, even though it may be 25-years away. Denying discharge now is simply kicking the can down the road.


Private loans are also difficult to discharge, but should not be. Why? Because demonstrating a hardship should be easy enough when considering the lack of flexible payment options for these loans. Most private lenders only offer two choices – pay or don’t pay. It should be easy to demonstrate that you cannot afford your $400, $600, or $1,000 a month minimum payment. If you’ve already defaulted, this should be even easier. Once defaulted, the lender accelerated the loan.There is no monthly minimum payment, the full amount is due. If that isn’t a hardship, what is?!

Difficulty Finding an Attorney

Attorneys Need to get Paid

Writing as an attorney, I of course agree with this. The question is, how can a debtor who can’t afford student loan payments, afford an attorney? I’ll simply say that is a business question for each individual bankruptcy attorney to address. If you’re a persuasive debtor, negotiate with the bankruptcy attorney. Bankruptcy filings are declining, which means these attorneys are looking for work. Better they should take your case at a discount for some money, then decline it and not have any income. That is not to say these attorneys deserve to work for an insane discount that bleeds them dry. The process for discharging student loans is full scale litigation. Remember that you get what you pay for. If the price sounds too cheap, don’t be surprised if the lawyer gives up at the first brick wall – and there will be many brick walls.

It’s Called an Adversarial Process for a Reason!

The process for discharging student loans, called an adversarial process, is full scale litigation. Not all bankruptcy attorneys practice litigation for a variety of reasons. The litigation can be grueling, and is always driven by the facts and circumstances of the debtor. The more evidence there is of hardship, the easier things are. The more speculative the hardship, the more work to be done, including depositions of the debtor, debtor’s family, expert witnesses regarding economics, and perhaps even medical experts (which isn’t cheap). Then there is the litigation maneuvering and posturing. Is one side delaying, is the other-side filing countless (useless) motions simply to increase the expense to the debtor’s attorney (see above)? This is not a simple task. Worse, the case law is still developing, especially with private student loan discharge. Further, there may not be case law if parties agree to settle prior to going before a Judge. If the Judge doesn’t get to decide anything, there’s nothing on the books to help other attorneys determine how ANY Judge is likely to rule. Thus past litigation results are clouded in mystery which makes it much harder for an attorney to gauge the likely-hood of future success.

Compromise as an Outcome

Many debtors are not necessarily looking to get out of their student loans. The bankruptcy discharge is a last resort because often times private lenders refuse to offer an affordable payment. If the lender continues to refuse an offer of an affordable repayment during a bankruptcy discharge process, they may very well lose. If, however, they offer something reasonable that is truly affordable, everyone wins. The debtor walks away with an affordable debt, the lender gets revenue it wasn’t getting before.

Break the Myth

Bankruptcy discharge for student loans, while difficult, is not impossible. Debtors, and debtor attorneys, must realize that bankruptcy discharge for student loans is achievable. Fees can be structured to the satisfaction of both the attorney and the client, while litigation can be made more efficient through repetitive handling of these types of cases.

Just to be sure I’m practicing what I preach, I was hired this week to file an adversarial process to discharge student loans.  It’s time to take the fear out of bankruptcy discharge for student loans.



  1. Scott Lutheran

    Hi Joshua:

    I’m in California…do you know of any attorneys in the Sacramento area I could contact? I am now 50 years old…only made $20,000 last year and the only job I’ve been able to find is a commissioned sales job that pays horribly…..I’m currently going into default with private loans and am on IBR for Federal loans but honestly…at 50….I don’t see any future prospects for me to ever get above the poverty level while strapped with this huge debt that continues to snowball with interest and penalties being tacked on constantly.

    Please help as I really have lost the desire to live on if this is all life is going to be for me.



    • Joshua Cohen

      I’ve trained about 200 attorneys in student loan law. You can find them on my site by clicking on the “graduates” tab.

  2. Robert F Salvin

    But the thrust of most of the opinions I’ve read is not to favor the discharge of students loans, and some judges don’t seem to care much about whether debtors can survive or not.

    I’ve always thought it would be helpful to have an economist testify regarding the burden of payment and how it will impact the debtor’s lifestyle. But it would be very expensive. Has anyone ever tried that?

    • Joshua Cohen

      I think an economist would be helpful and am aware of some folks who have brought in such an expert.

  3. Thanks for the inspiring post, Joshua. We will be filing an adversary proceeding this month to seek to discharge a student loan for a low-income, elderly lady.

  4. TexasOB

    This is was good advice and sheds some light on a few things. I do have a question and a suggestion. The question: When I started my practice right out of residency I was unable to address my largest student loan, ACS just would not talk to me and there was no affording the payment at that time. One year later the loan went into default and several months later I started rehabilitation. The loan is now current will stay that way now that my practice is providing the income to do it and I am now on a state program that pays $195k of my $350k student loan because I am practicing medicine in a rural area. The question is this… $45k of that ballance was a collection fee tacked on by the attorney firm that handled the collection, is this legal not from the law of 18% but from the “reasonable” aspect of the law? It wouldn’t do much to have that reduced but on a loan that charges $1800/mo in interest…. every little bit helps.

    The suggestion: you and your large netword of trained lawyers should take a few key cases and push them through trial to set precedent rather than settling. The only way case law gets made is when its forced.

    • Joshua Cohen

      We don’t settle because we don’t want case law, we settle because that is what the client chooses and it is usually for the best. Remember, litigation has win/lose odds. There is no sure bet. Push to hard and it could backfire. Besides, case law isn’t the goal, discharge is. Many settlements are for discharge.

  5. Hi Josh:
    In an unreported case, our bankruptcy judge denied a discharge to an individual who had cancer and couldn’t continue working 2 jobs to repay his student loans. I believe the person testified that he was told that his cancer was terminal.

    Held: This didn’t constitute hardship enough because he could recover from his cancer. If I have a case with a medical hardship, I find that it’s easier to obtain a discharge of the student loan through the administrative procedures of the student loan itself, then through the bankruptcy court. I’m in the 2nd Circuit, home of the ‘Brunner Test’ from the Appellate Court, itself as I am certain you are aware.

    Now to that end, US Representative Courtney and others have sponsored a bill allowing for the discharge of private student loans in bankruptcy. I believe that the only practical response is to amend the law back to what it was at one time when student loans were dischargeable in bankruptcy under a given set of conditions. We should be urging people to write to their congressman or congresswoman and urging them to support this legislation. And, of course, having to tell a client that his chances for success in an adversarial matter based on previous decisions of the judge, won’t encourage anyone to want to pay legal fees on a long shot.

    I wish you the best in the struggle to set people free from debt and I admire the fact that you like in the Charge of the Light Brigade are marching into the ‘Valley of Death, with cannons to right of you and cannons to the left of you, your’s not to reason ‘why’ your’s but to do or die’

    My grandfather once told me that there was a fence so high, no horse had ever jumped it or could jump it. But someone forgot to tell this dumb horse about the fence. So he went ahead and jumped it anyways. Good luck and the best to you.

    Don’t get me wrong, I admire the Mariners going up Iwo Jima, but so far I fail to see a trend or favorable winds in our bankruptcy court regarding student loans.

    • Joshua Cohen

      Thanks David. It’s an uphill battle, that much I know.

  6. Michael Fox

    First and Foremost. I live in Ohio. I am 48 years of age. I have four years of college” Premed/ BS Program. After 15 abdominal surgeries and no successful rehab I am recognized by NELNET as Totally and Permanently Disabled. I have loans forgiven through them. I have two Chase Private Student Loans. I am currently in default for $40,000 and have exhaustively hit a brick wall in terms of negotiating with them. I attempted to pay them for a short time, but they told me it wasn’t effective. They accelerated me. My soon to be ex-wife signed one of the loans. We have two children living with me. My Income after Health Ins and Taxes is $1241.00 From Disability Retirement OPERS.. My wife $1400-$1600 per month from Walgreens. I have a house payment $1021.16.We will be selling home after our Dissolution. I get to keep my kids. Medical Bills ongoing. My wife has a vehicle to drive I have heard nothing more from Chase, Voice message, Mail, or other. I was told by multiple attorneys and one including a seasoned mentor who collected a consultation fee from me already that Loan Forgiveness was impossible. They ALL chuckled at me and one of them is on the bankruptcy board in Cincinnati for this region of Ohio. I presented required material on my own to Nelnet and it was forgiven. However I still have Chase Private loan. I need someone proactive. I understand your fees are required. I’m pretty good with forms and following concise instructions.
    I need some direction. I live in one of the top 10 dying cities in the nation ” Forbes” and have visited multiple times to meet school faculty and see homes in Murfreesboro Tenn. Top 3 Growing cities “Forbes” .. I am Driven.
    I have self respect and pride, I don’t give up easy, I’m a member of Free Masonry for 28 years, in that said, I live my life to serve my family and God with those foundations.
    I look forward to hear from you with some constructive guidance, direction and solution
    Thank you for your consideration.

    • Joshua Cohen

      You’re asking for help via my board. I cannot post suggestions, except that you should contact my firm directly to see how we can assist.

  7. Having litigated many student loan cases through trial and decision, I think these cases can be prosecuted a lot easier and more cost effective than most bankruptcy lawyers may think. Your article was simple and straight to the point. My style. Good job.

    • Joshua Cohen

      Thanks Chris. Glad to hear success stories. We need more of that to motivate borrowers to discuss and more bankruptcy attorneys to realize the possibilities.

  8. We need to get the Congress to pass a bill that would dischargr all students loans across the board in bankruptcy and we need to do it today..

  9. ischarge all students loans in bankruptck.

  10. Faith Lindsay

    I graduated in 2005 and in 2008 i received a neck/head injury which has left me in chronic pain with high blood pressure problems leaving me unable to work. In 2009 I applied for SSI & after years of proving my disability to the court I won my case in April 2014. My student loans have now gone into default status. The company that holds my original loans has tripled the debt. I am Overwhelmed by the stress of not knowing what to do. What should I do? I need help.

    • Joshua Cohen

      If federal, you can fill out an application to have it discharged. If private, you’ll need to speak with a local bankruptcy attorney to attempt to discharge it. You can find a local student loan lawyer in your area on my website. If there isn’t anyone local, contact me directly.

  11. Faith Lindsay

    The loans are Federal-Discharged? I will do some research-Thank you for your time.

  12. Sarah Newbry

    I am so happy to stumble upon your blog! There is hope! I’m looking into some of the lawyers you’ve trained in Utah. Do you have any suggestions on the debtors part to help push for new laws, etc?

    • Joshua Cohen

      Yes – follow what is going on in Congress and how your representatives react. Then lobby, lobby, lobby!

  13. Carl

    I sincerely hope that Harkin’s education bill (the Higher Education Affordability Act (HEAA)) passes, as it includes dischargeability of private student loans.

    I am near the end of a Chapter 7, but could not afford to pay my attorney to attempt an adversary proceeding (he wouldn’t do one anyways, as he has no clue in this department).

    I wonder —

    — Will I be able to re-open the Chapter 7 down the road and try to discharge the private student loan debt if the HEAA passes?

    — Otherwise, can I wait four years and file a Chapter 13 and include it then? Wouldn’t things discharge after 3-5 years of payments to a trustee?

    — I almost would like to settle the private student loan debt. The best offers I’ve seen from the debt collectors (before I filed the Chapter 7) were around 75-80% of the balance in a lump sum. I have a relative who would be willing to take out a mortgage loan for me if they could offer something closer to 40-50% and guarantee that collection would stop against both me and my co-signer, but I fear that this is a pipe dream. (I’d much rather pay this relative installments over 10-20 years than deal with private student loan servicers ever again!)

    –Combine the fact that my loans have defaulted, bounced around between collectors, and I don’t even know who owns the debt at this point AND the non-dischargeability gives the loan holder little incentive to settle, I am stuck between a rock and a hard place.

  14. Paul Chilgren

    Here is just an additional comment supplementing my statement. I have certain abilities that would allow me the possibility of a pro se approach, having taken several law courses during my education in school administration. but the “full blown” aspect of this sort of federal lawsuit would be challenging (discovery, motions of all sorts, etc). If I were to try that, would you or another attorney you might know about, be able to meet legal professional ethical standards by simply advising me, not representing me? I As for my self representation previously, I have been pro se in own previous federal lawsuit, (Chilgren vs. Social Security, District of Hawaii, filed 1999 and settlement 2002). Here my claim was that alleged overpayments should be cancelled or adjusted because of equal protection aspects of the 5th and 14th amendments. My claims were further backed by the legal principle of equitable estoppel. I did the case law studies showing a connection. Fortunately, here, the Assistant United States attorney and I worked cooperatively together as adversaries so that the ultimate settlement, days before rail in Hawaii provided for reasonable stipulations effecting settlement of all claims.. I would not have the same confidence here. Finally, a key issues for me would be the timing for my adversarial, if I did it. That is, my last education loan was 3 and one half years ago. I am concerned about a potential defense claim citing the issue of “good faith.” I have kept all loans in good standing, however. I just wonder if my suit should wait another year and a half, because of the “good faith” issue. If you could work for me as an advisor, what would be your fee for the giving of advice only? Thanks. I will look forward to hearing from you. Paul E. Chilgren

  15. darnell477

    Help. I owe Chase student loans $70,000. I simply don’t make enough money to pay the loan. I’m in debt. This has just made me sick. My docotr has stated that my presuer is too hig. I can’t seem to stop worrying about the bills. I also owe Sallie mae in total about the same. I worried about them garnishing my pay check or my co signers'(my brother) pay check. I don’t make enough and he a janitor who makes even less. I teach school but make very little to make ends meet. I cant file on the Federal Loans and I can’t file on the private loans. this has really tried to tackle my health. I just happen to see this information(you) online. I went online to try to make a small payment to Chase just now, only to discover it says Paid in Full. It has a description that says 552. It says Balance $0. What does that mean and what can i do? Please help me. Give me some direction. Lord knows I realy need help here.

    • darnell477

      Sorry for the misspells in the above post. After I discovered them, I could not edit. It’s early in the morning. I have not gone to sleep. This student loan situation has gotten me really concerned. HELP!! I will be eternally appreciative.

    • Joshua Cohen

      Who says you can’t file bankruptcy for your student loans? It is a high hurdle to pass the test for discharge, but it is possible. If you’re looking for specific advice, contact my office directly. I cannot give such advice on a board like this.

  16. Angela Smith

    Hi I filed Chapter 7 Bankruptcy over 4 years ago. I had federal and private student loans on there. I was called by Chase after my court date and they aggressively told me I had to repay my loan that student loans had to be paid regardless. I called my attorney and he never returned my calls. I got scared so I started paying them. I recently pulled my credit report and under chase student loans it states account balance $0, Amount due $0 then under remarks says Chapter 7 Bankruptcy. I have been paying it for over 4 years. I contacted my attorney about it and he said if it is a private loan then have them contact him if they call me but what about the money I have paid them since it was discharged? Does this mean I don’t have to pay it? I’m so confused. Please help….

    • Joshua Cohen

      You still owe it. They probably filed an insurance claim because private loans default as soon as you file a bankruptcy. You may owe Chase nothing, but you owe their insurance company. Who knows if they’ll really come after you.