The Student Loan Adversary Proceeding

A student loan adversary proceeding is a separate lawsuit filed inside your bankruptcy case that asks the court to discharge your student loans for undue hardship. Federal Rule of Bankruptcy Procedure 7001(6) requires it: unlike credit cards or medical bills, student loans are not wiped out just by filing bankruptcy and listing them. You have to bring this complaint and win it. Here is the whole sequence, from filing to a discharge order.

Why listing the loan in your bankruptcy is not enough

Your bankruptcy schedules list every debt you owe, and for most debts the discharge at the end of the case takes care of them automatically. Student loans are an exception under 11 U.S.C. § 523(a)(8). The debt survives the ordinary discharge unless a court specifically finds undue hardship, and the only way to get that finding is to ask for it in an adversary proceeding. Skipping this step leaves the loan fully collectible after your case closes. There is one exception worth checking before you assume you need this lawsuit at all: private student loans that may be dischargeable without an adversary proceeding, because they fall outside § 523(a)(8) in the first place.

Step 1: Filing the complaint

The case begins with a complaint filed under Rule 7001(6) inside your open bankruptcy. The complaint identifies each loan and lender and lays out the facts that support undue hardship under the Third Circuit’s Brunner test. Two practical points make this easier than borrowers expect:

• There is no 60-day deadline. Unlike some other dischargeability complaints, a § 523(a)(8) student loan complaint can be filed at any time while the case is open, and a closed case can even be reopened to bring it (Rule 4007(b)).
• There is generally no separate court filing fee for a debtor to bring a complaint to determine the dischargeability of a debt, so the adversary proceeding does not add a court fee on top of the bankruptcy itself. For the underlying bankruptcy filing fee itself, and every other current PA and NJ figure, see our current bankruptcy numbers page.

Step 2: The summons and serving the right parties

After the complaint is filed, the clerk issues a summons, which has to be served promptly (within seven days of issuance under Rule 7004(e)). Who gets served depends on the loan:

• Private loans. The lender or its servicer is served by mail to an officer or agent under Rule 7004(b)(3).
• Federal loans. When the loan is held by the U.S. Department of Education, you are suing the United States, and Rule 7004 requires service in three places: the U.S. Attorney for the district (through the civil-process clerk), the Attorney General in Washington, and the Department of Education itself (Rule 7004(b)(4) and (b)(5)). Missing one address is a frequent, avoidable reason cases stall.

For federal loans, service on the United States is what puts the Department of Justice attorney on the case, which is where the DOJ attestation process comes in.

Step 3: The defendant responds

The defendant has 30 days after the summons issues to answer the complaint, and the United States and its agencies get 35 days (Rule 7012). The defendant can file an answer, move to dismiss, or, in a federal case that fits the attestation framework, signal early that it will recommend discharge. If a private lender fails to respond at all, you can move for a default judgment.

Step 4: Discovery and pretrial

Adversary proceedings run under the Part VII rules, which import the ordinary federal civil-litigation rules for pretrial procedure and discovery. In a contested case that means exchanging documents and information about your income, expenses, medical situation, and repayment history, the evidence that builds the Brunner record. Cases that fit the DOJ framework cleanly, or that the lender does not contest, often skip most of this.

Step 5: How it ends

An adversary proceeding resolves one of three ways:

• Settlement or a consent judgment. This is the common path for federal loans under the attestation process: DOJ stipulates to the facts and recommends discharge, and the court enters judgment.
• Default judgment. If a private lender never responds, the court can enter judgment discharging the loan.
• Trial. If the case is contested, the bankruptcy judge hears the evidence and decides whether you meet the Brunner test. The court can grant a full discharge, and in some cases a partial discharge. In the Third Circuit, though, a partial discharge has to come out of the Brunner analysis itself: in Faish, the Court of Appeals rejected a bankruptcy court’s attempt to grant partial relief on general equitable sympathy after the borrower had not met the test.

Where the discharge succeeds, the loans, or the discharged portion, are gone. For an overview of the standard the court applies and who tends to win these cases, see can you discharge student loans in bankruptcy.

Timeline and cost

Timing depends on whether the case settles or is contested. A federal case that fits the attestation framework, or a private case the lender does not fight, can resolve in a matter of months. A fully contested case with discovery and a trial runs longer. We give you a realistic read on both the likely path and the cost at the consultation, before anything is filed, so the decision to bring the proceeding is made with eyes open.

A note on Philadelphia & South Jersey practice

These proceedings file in the U.S. Bankruptcy Court for the Eastern District of Pennsylvania (Philadelphia) or the District of New Jersey, Camden vicinage (South Jersey), inside your existing bankruptcy case. For federal loans, the United States is served through the local U.S. Attorney’s Office, and the assigned Assistant U.S. Attorney handles the attestation review. Knowing how each district and each judge moves these cases is part of setting realistic expectations.

Talk to a bankruptcy lawyer who serves Philadelphia & South Jersey

The Law Office of Mike Assad prepares and files student loan adversary proceedings for individuals across Philadelphia and South Jersey. 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. Start with our overview of student loan discharge.

• A free, confidential consultation with no obligation, and an answer on whether an adversary proceeding makes sense for your loans.
• 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