Yes, you can discharge student loans in bankruptcy, but the standard is demanding. Educational debt is carved out of the ordinary discharge by 11 U.S.C. § 523(a)(8), so a discharge requires proving “undue hardship” in a separate lawsuit filed inside your bankruptcy case. In the Third Circuit, which covers Pennsylvania and New Jersey, courts measure undue hardship with the Brunner test.
Most unsecured debt is wiped out when you file bankruptcy. Student loans are not. Here is what § 523(a)(8) requires, how the undue hardship test works in Pennsylvania and New Jersey, when federal and private loans are treated differently, and what the practical path looks like for filers in Philadelphia & South Jersey.
The short answer
To discharge student loans, you file a Chapter 7 or Chapter 13 case, then file a separate complaint inside the bankruptcy case (an adversary proceeding) under Federal Rule of Bankruptcy Procedure 7001(6), and prove that repaying the loans would impose an undue hardship on you and your dependents. If the court finds undue hardship, the loans are discharged. If not, they survive bankruptcy and you remain liable.
Why student loans are harder to discharge than other debt
Most consumer debts (credit cards, medical bills, personal loans, deficiency judgments) get discharged automatically when a bankruptcy case closes. Student loans are different because of 11 U.S.C. § 523(a)(8), which makes educational debt a specific exception to discharge.
The carve-out covers three categories: federal student loans, federally insured or guaranteed loans, and “qualified educational loans” as defined in 26 U.S.C. § 221(d)(1). Private loans that meet the qualified definition fall inside the exception. Private loans that fall outside the definition can sometimes be discharged like ordinary consumer debt, as the section on federal vs private loans below explains.
The undue hardship standard under § 523(a)(8)
Section 523(a)(8) makes educational debt dischargeable only if “excepting such debt from discharge … would impose an undue hardship on the debtor and the debtor’s dependents.” The statute does not define undue hardship. Federal courts of appeals have developed their own tests, and the Third Circuit (which covers Pennsylvania and New Jersey) follows the Brunner framework.
The Brunner test (three prongs)
The Third Circuit adopted the Brunner test in In re Faish, 72 F.3d 298 (3d Cir. 1995). The test comes from Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2d Cir. 1987), and applies the same way in Chapter 7 and Chapter 13.
Brunner requires the debtor to prove three things:
- Poverty. Based on current income and expenses, the debtor cannot maintain a minimal standard of living for the debtor and the debtor’s dependents while paying the loans.
- Persistence. Additional circumstances exist that make this state of affairs likely to persist for a significant portion of the loan repayment period. This prong asks for more than a tight budget today; it looks for something (a disability, an age near retirement, a long earnings record that has never covered the loans) that signals the hardship is durable, not temporary.
- Good faith. The debtor has made good-faith efforts to repay the loans, for example by making payments when possible, enrolling in an income-driven repayment plan, or seeking deferment or forbearance.
Each prong has to be met. The debtor bears the burden of proof. The Brunner test has a reputation as nearly impossible to satisfy. The reputation overstates the difficulty. Courts have granted hardship discharges to debtors with documented disabilities, single parents with limited earning capacity, debtors with long-term medical conditions, and older debtors with limited remaining earning years. The standard is demanding, not unreachable.
Federal vs private student loans in bankruptcy
Federal student loans (Direct Loans, FFEL, Perkins) sit inside § 523(a)(8). Discharge requires the undue hardship adversary proceeding regardless of the loan’s origination date. For Direct Loans held by the Department of Education, a 2022 government process has made these cases far more reachable. See how the DOJ’s 2022 attestation process works.
Private student loans split into two categories. Loans that meet the 26 U.S.C. § 221(d)(1) “qualified educational loan” definition fall inside § 523(a)(8) and require an undue hardship finding. Loans that fall outside that definition (for example, amounts lent beyond the school’s cost of attendance, or loans for programs at schools that were not eligible) can sometimes be discharged like ordinary unsecured debt, without proving undue hardship. Which category a private loan falls into is a technical, fact-specific question. We walk through it, and the recent case law, on our dedicated page: private student loans in bankruptcy.
The adversary proceeding under FRBP 7001
Discharging student loans is not automatic. Listing the debt in the bankruptcy schedules does not get the loan discharged. The debtor has to file a separate complaint inside the bankruptcy case under Federal Rule of Bankruptcy Procedure 7001(6). The complaint identifies the loans, the lender, and the facts supporting undue hardship. The lender (or the U.S. Department of Education for federal loans, represented by the Department of Justice) gets served, and the case can settle, go to trial, or result in a default judgment if the lender does not respond. For the full step-by-step, see the student loan adversary proceeding.
Chapter 7 vs Chapter 13 for student loans
The undue hardship standard is identical in both chapters. The strategic considerations differ.
| Feature | Chapter 7 | Chapter 13 |
|---|---|---|
| Standard for student loan discharge | § 523(a)(8) undue hardship | § 523(a)(8) undue hardship (same standard) |
| Process required | Adversary proceeding under FRBP 7001(6) | Adversary proceeding under FRBP 7001(6) |
| Effect on other consumer debt | Discharged in about 4 to 6 months | Restructured over 3 to 5 years; remaining qualifying debt discharged at plan end |
| Automatic stay duration | Roughly 4 to 6 months | 3 to 5 years |
| Court filing fee | $338 | $313 |
For most filers, the chapter choice is driven by the rest of the debt picture rather than by the student loans alone. See our breakdown of Chapter 7 vs Chapter 13 for the consumer comparison, and the student loan discharge service page for an overview of how the firm handles these cases.
What hardship discharges look like in practice
Three patterns recur in successful hardship discharge cases:
- The disabled or chronically ill debtor. Borrowers with documented disabilities or chronic medical conditions that limit earning capacity often build a strong factual case under all three Brunner prongs.
- The long-term low-income worker. Borrowers who have worked steadily but have never earned enough to make meaningful progress on the loans often satisfy the poverty and persistence prongs with documented income records.
- The older borrower with limited remaining earning years. Borrowers approaching retirement age with significant outstanding loan balances and limited future earning capacity build a strong persistence case.
These are not the only paths to a hardship discharge. Every case turns on its own facts, and the record built for the adversary proceeding does the work the standard requires.
A note on Philadelphia & South Jersey practice
Undue hardship adversary proceedings in Philadelphia file with the U.S. Bankruptcy Court for the Eastern District of Pennsylvania. South Jersey cases file with the District of New Jersey, Camden vicinage. Each district has its own bench of bankruptcy judges and a U.S. Department of Justice office that handles federal student loan litigation. Local familiarity with how a specific judge weighs Brunner evidence and how the local office litigates undue hardship cases can affect both strategy and the cost-benefit analysis of bringing the complaint.
Talk to a bankruptcy lawyer who serves Philadelphia & South Jersey
The Law Office of Mike Assad helps individuals across Philadelphia and South Jersey evaluate whether student loan discharge is realistic for their situation and, where it is, file the adversary proceeding to seek it. Mike is admitted in both Pennsylvania and New Jersey and handles cases through the U.S. Bankruptcy Court for the Eastern District of Pennsylvania and the District of New Jersey.
- A free, confidential consultation with no obligation, and a straight read on whether the Brunner record supports a hardship discharge in your case.
- Affordable pricing where the case structure allows, with payment plans available. A $999 Chapter 7 program for qualifying filers.
- The same lawyer on your case from the first call through the discharge order, and a live person on the phone when you call.
- Fully virtual representation by phone and Zoom, so you never have to come to an office.
Book your free consultation online. The firm has offices in Cherry Hill, New Jersey, Egg Harbor Township, New Jersey, and Philadelphia, Pennsylvania. If it would help, you can share your debt picture before the call so the consultation starts from the facts.
Frequently asked questions
Yes, under 11 U.S.C. § 523(a)(8), but only if you prove undue hardship through a separate adversary proceeding inside the bankruptcy case. In the Third Circuit (Pennsylvania and New Jersey), the controlling standard is the Brunner test.
The Brunner test comes from Brunner v. NYSHESC, 831 F.2d 395 (2d Cir. 1987), and was adopted by the Third Circuit in In re Faish, 72 F.3d 298 (3d Cir. 1995). The debtor has to prove three prongs: poverty, persistence, and good faith.
The undue hardship standard is identical in both chapters. The chapter choice is usually driven by the rest of the debt picture rather than by the student loans alone.
Yes. Listing the loans in the schedules is not enough. Federal Rule of Bankruptcy Procedure 7001(6) requires an adversary proceeding to determine the dischargeability of student loans.