Student loans can qualify for discharge in bankruptcy

The Bee’s recent article on the Dusty Buns bankruptcy states that student loans cannot be discharged in bankruptcy. This is not, strictly speaking, correct. Section 523(a)(8) of the Bankruptcy Code actually allows for the discharge of student loans, provided the debtor can show that she will suffer “undue hardship” in the absence of a discharge.

Courts have interpreted “undue hardship” very strictly, leading to the development of the (technically incorrect) conventional wisdom that student loans simply cannot be discharged. But legal commentators and courts, including the 9th Circuit Bankruptcy Appellate Panel, are beginning to challenge this unduly strict interpretation of the “undue hardship” requirement, and many believe that a shift towards greater allowance of student loan discharge may be in the offing.

Insolvent individuals suffering under extremely large student-loan burdens should consult with a bankruptcy attorney to determine if they might qualify for a discharge rather than simply assuming that it is always impossible.

This story was originally published January 7, 2017 at 11:52 AM with the headline "Student loans can qualify for discharge in bankruptcy."