Student loan discharge in bankruptcy is difficult but not impossible. For Houston residents, here is what you need to know about the undue hardship standard and recent changes.
Discharging student loans is difficult but not impossible. You must file an adversary proceeding in the S.D. Tex. and prove undue hardship. Recent DOJ guidance (2023) has made discharge easier.
Under 11 U.S.C. section 523(a)(8), student loans are presumed non-dischargeable unless you prove "undue hardship" through an adversary proceeding. However, the DOJ issued 2023 guidance making discharge easier, and courts are granting more discharges.
Most courts use the Brunner test:
Texas residents cannot have wages garnished for student loans (a rare state-level protection), but the federal government can still offset tax refunds, Social Security, and use Treasury offset programs. Filing bankruptcy in Houston can address the underlying debt and potentially discharge student loans through the Brunner or totality-of-circumstances test in the Fifth Circuit.
Discharging student loans is difficult but not impossible. You must file an adversary proceeding in the S.D. Tex. and prove undue hardship. Recent DOJ guidance (2023) has made discharge easier.
The Brunner test requires: (1) you cannot maintain a minimal standard of living and repay, (2) additional circumstances are likely to persist, and (3) you made good faith efforts to repay.
IDR plans cap monthly payments at 10-20% of discretionary income. After 20-25 years, the balance is forgiven. The SAVE plan (2024) further reduced payments.
Texas residents cannot have wages garnished for student loans (a rare state-level protection), but the federal government can still offset tax refunds, Social Security, and use Treasury offset programs. Filing bankruptcy in Houston can address the underlying debt and potentially discharge student loans through the Brunner or totality-of-circumstances test in the Fifth Circuit.
Yes. Filing stops garnishment, tax refund offset, and Social Security offset for the duration of the case.
Private student loans can potentially be discharged under the same undue hardship standard, and some courts are more willing to discharge private loans.
Use the free 1328(f) screener to check whether a prior discharge affects your eligibility for a new bankruptcy discharge.
Free Discharge Screener Means Test GuideRelated Houston Bankruptcy Resources
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