Student loans are much more difficult to have discharged than other forms of loans. Courts will dismiss the loan if the borrower can prove that the loan “will impose an undue hardship on you and your dependents”. Courts determine if you are eligible for this claim by asking the following questions which are known as the Brunner Test:
1) the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for the debtor and the debtor’s dependents if forced to repay the student loans;
2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and
3) the debtor has made good faith efforts to repay the loans. If the borrower is filing for Chapter 7 bankruptcy the same process applies.
At any time during the bankruptcy the borrower can file to prove undue hardship without paying an extra fee. By filing for bankruptcy collectors cannot ask for student loan payments until the case has been settled in Bankruptcy Court. Student loans can also be tamed in a Chapter 13 bankruptcy by creating a payment plan that allows the debtor to pay back mortgages and other secured debts first and after your payment time is over, usually three to five years, the borrower can once again apply to prove undue hardship.