In Louisville, and across Kentucky and neighboring states of Ohio and Indiana, we talk to many borrowers with student loans. Often they have found themselves having trouble with repayment, given the difficulty in finding jobs and, as important, finding jobs that pay enough so they can afford to live and repay the loans. 

Many believe that student loans cannot be discharged in bankruptcy, and are practically ready to give up. While many student loans may not be dischargeable in bankruptcy, there are circumstances that may permit a discharge. Even if you cannot obtain an outright discharge for your student loans, filing a Chapter 13 can greatly help your financial situation.

To receive a discharge of your student loan, you need to show ‘undue hardship.’ This is measured by the three-part Brunner test. This is test was once very difficult to meet, because you need to show that you cannot maintain a ‘minimal standard’ of living, that your financial situation will not improve for the foreseeable future and that you have made a good faith effort to repay the loan.

Sadly, the second factor has become easier to show given the lack of hiring and job growth since the recession. The long-term contraction of the job market may mean you may never be able to obtain a job in your field of training, and if you are saddled with six-figures of debt, your situation may be so dire as to qualify under Brunner for discharge. 

Because this can be very factually specific, you need to discuss this issue with a bankruptcy attorney.

Source: Huffington Post, “What Can I Do About My Overwhelming Student Loan Debt?” Steve Rhode, May 14, 2013