Student Loan Debt in Bankruptcy

Written and Verified by Ralph A. Ferro, Jr., Esq.

Student Loan Debt in Bankruptcy:

Is Student Loan Debt Dischargeable in Bankruptcy? The answer is: It depends.

There are 3 factors or prongs (Brunner Test) that must be met to discharge student loan in a bankruptcy:

Poverty:
Persistence
Good Faith

Student Loan Debt in Bankruptcy – Case Example

Details of Pro Se Debtor’s Case:

Debtor sought to discharge her student loan in bankruptcy.
Debtor met two of the above prongs.
Debtor had not responded to the U.S. Department of Education
Required support behind her application for an administrative discharge was missing
Debtor’s actions are lack of good faith.

Court Ruling:

The Debtor could meet all 3 (three) prongs of the requirements to discharge student debt
However, she did not show good faith when she failed to fully respond to the U.S. Department of Education’s application for an administrative discharge.
U.S. Department of Education filed a summary judgment application and it was granted by the Court.
Debtor could not discharge student debt in bankruptcy.
She fails to show good faith in responding the information requested.
If the Debtor completed the application and provided the required documents, her student debt was allowed to be discharged.
Debtor’s lack of legal knowledge and representation adversely affected the Debtor.

In summary, we confirm that representing yourself in a bankruptcy issue is not prudent. Most times, Pro Se Debtors are not knowledgeable in the complex field of bankruptcy law.

A board certified bankruptcy attorney (as I am) would know the requirements and most definitely urged the Debtor to complete the application in full.

If you are looking to reduce or eliminate your debts, contact me for a free bankruptcy consultation: