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Miami Bankruptcy & Criminal Attorney / Blog / Bankruptcy / New Hope for Discharging Student Loan Debt Through Bankruptcy

New Hope for Discharging Student Loan Debt Through Bankruptcy


For students who are struggling to pay back their student loans, the recent Supreme Court decision that squelched President Biden’s loan forgiveness plan was a blow to both their finances and their morale.  While having $10 thousand to $20 thousand in such debt forgiven would have been an ideal solution for many, the current administration has found a way to try to help the most vulnerable borrowers in spite of the Supreme Court’s hammer: bankruptcy forgiveness.

What it Means 

In the past, although student loans could theoretically be erased when people filed for bankruptcy, it was quite difficult.  While credit card debt, medical bills and the like were instantly obliterated in a bankruptcy proceeding, most people found the legal hurdles associated with discharging student loan debt to be too onerous to even attempt to include it in a bankruptcy filing. But things have changed for the better in that regard.

Now, a new process has been put into place in order to ensure that people filing for bankruptcy who have federal student loan debt will face fairer treatment as they navigate clear guidelines in the pursuit of debt relief. That entails filling out an attestation form, and if it is determined that someone meets the requirements, including having income that falls short of their expenses, that person could be recommended for a partial, or even a full discharge of their student loan debt.

How Significant is This? 

About 25,000 people who were burdened with student loan debt filed for bankruptcy annually prior to the pandemic, but less than 3,000 of them took the extra steps to include their student loan debt in the discharge request each year.  That’s likely because having to prove undue hardship was never defined in bankruptcy code, and various jurisdictions interpreted it differently.  Today’s rules, however, provide specific parameters that help to nail down this terminology, including that the borrower has made a good faith effort to repay the debt and:

  • Never earned a degree;
  • Has a chronic illness or disability;
  • Has been unemployed for a period of time;
  • Has been repaying debt for 10+ years;
  • Is now at retirement age.

A Light at the End of the Tunnel 

For those struggling with debt, student loan forgiveness could be a lifesaver.  These loans have long been held to different standards than other forms of debt, leaving borrowers to make minimum payments or to default altogether, as interest rates raised the amount of debt over time.  New changes to the rules will make things more equitable and give debtors a chance to start over.

Advocating for You 

At the Law Office of Julia Kefalinos, our dedicated Miami bankruptcy attorneys are thrilled that student loan debt can now be included in petitions with ease, and can help you to navigate through the challenges of bankruptcy.  To discuss your situation, schedule a confidential consultation in our Miami office today.



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