As college tuitions continue to skyrocket, an increasingly stressful source of financial trouble that leads people to bankruptcy is student loan debt. Unlike medical bills, credit card debt, and other common liabilities, however, student loans are not automatically dischargeable under the bankruptcy laws. Thus, once a debtor successfully completes the various requirements of the bankruptcy process and ultimately receives the coveted discharge, that student loan debt remains, and payments on this debt must continue to be made, lest the debtor become subject to personal liability. While it is extremely difficult to receive a discharge of a student loan, it is not impossible. In order to discharge a student loan, the debtor must make a showing that “an undue hardship on the debtor and his or her dependents” will be imposed by payment of the debt. Such a showing has historically been subject to a heavy burden of proof by the debtor, and often even when the debtor is successful in making this showing, the loan payments are simply reduced by an amount that would impose a less than substantial hardship.

In the event that the debtor can successfully prove an undue hardship, the student loan debt might be completely canceled, although more often the debt is simply reduced. To make such a showing, the debtor must file a petition that sufficiently sets out the circumstances which form the basis of the undue hardship, and must win an adversary hearing against the lending institution’s attorneys and often against the bankruptcy trustee. So how does one show an undue hardship?

Different test are used by the courts, but one of the more common formulations of undue hardship is called the “Brunner” test, under which a debtor must show:

• Inability maintain a “minimal” standard of living if required to repay the student loans;
• Existence of additional circumstances which indicate that this state of affairs is likely to continue throughout a significant portion of the repayment period; and
• That the debtor has made good faith efforts to repay these student loans.

If a debtor is to prevail in securing the discharge of student loans, he or she must obtain the representation skilled and experienced bankruptcy attorney.  Hearings involving the “undue hardship” standard are adversary proceedings; basically mini-trials on the issue of undue hardship, and require a skilled advocate to persuade the bankruptcy judge to rule in your favor. The expert bankruptcy lawyers in the Dothan office of Boles Holmes White are ready to fight for you. Email us or call our bankruptcy and student loan attorneys today at 334-366-6086 for a consultation, and let us put our experience and expertise to work for you.