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New Guidelines on Student Loan Discharge in Bankruptcy 

Christopher J. Kane, P.C. Dec. 28, 2022

Student Loan Handwritten in A Note. Money for EducationIn the United States, filing for bankruptcy allows individuals who are overwhelmed with student loan debts to seek the relief they need. However, there are updates you should note regarding the discharge of student loans through bankruptcy. An experienced Oregon bankruptcy attorney can enlighten you about these new guidelines and help you answer any questions you might have. 

Attorney Christopher J. Kane is committed to offering knowledgeable and comprehensive guidance to clients in bankruptcy-related matters involving student loan discharge. His firm, Christopher J. Kane, P.C., serves clients in Portland, Oregon, and the surrounding areas of Clackamas County, Washington County, Columbia County, and Yamhill County. Schedule a free consultation with him to learn more about your options for seeking debt relief.  

New Process for Student Loan Bankruptcy Discharge 

When facing financial distress, bankruptcy remains a promising solution to eliminate some debts and achieve financial relief. At the end of your bankruptcy case, some of your debts may be discharged. Previously, Congress had set a higher bar for discharging student loan debts compared to other types of unsecured debts. 

However, after various complaints and a detailed review, the Department of Justice (DOJ), in conjunction with the Department of Education (DOE), has now established a fairer, more improved, and transparent bankruptcy discharge process for student loan borrowers. The new process will: 

  • Help ensure a transparent, accessible, and consistent procedure for student loan debt discharge in bankruptcy. 

  • Ease the burden for consumers to seek discharge of student loan debts in their bankruptcy case. 

  • Help the Department of Justice to easily identify bankruptcy cases where student loan debt discharge is appropriate. 

Furthermore, under the new process, individuals who are seeking student loan debt discharge will fill out and submit an attestation form. This will help the government to evaluate their request or reasons for seeking bankruptcy discharge.  

Also, the DOE and DOJ will assess the information provided by the individual, consider various factors related to undue hardship, and decide whether to allow a discharge of the individual's student loan debt. In some cases, a partial discharge may be recommended. 

Factors That Will Be Considered 

The following are some factors that will be considered by the Department of Justice to determine undue hardship. 

Present Ability to Pay 

The Justice Department attorney will use the existing standards and procedures outlined by the IRS to determine a person’s ability to pay their student loan debts. This may involve calculating the consumer’s expenses and comparing them to their income. In the event that the consumer’s expenses are greater than or equal to their income, the DOJ may determine that they lack the ability to pay. 

Future Ability to Pay 

In addition, the DOJ will evaluate if the consumer’s present inability to pay is only a short-term problem or whether it will continue. However, certain factors, such as chronic illness, disability, prolonged unemployment history, retirement age, and lack of skill or education, may only mean that the debtor’s financial situation isn’t likely to improve. Hence, when these factors are present, the DOJ may determine that they lack the future ability to pay. 

Good Faith Effort 

However, some debtors may have good intentions to pay back their student loan debts but remain unable to due to various circumstances. Under the “good faith” standard, the DOJ will evaluate whether the person made considerable efforts to earn an income, manage expenses prudently, and pay back their student loans. 


Finally, the Justice Department will evaluate the debtor’s household income, the value of their assets, and their savings to determine whether they will likely face undue hardship by paying their student loan debts. 

If you need assistance seeking a student loan discharge in your bankruptcy case, you should reach out to an experienced bankruptcy lawyer right away.  

Turn to Experienced Guidance 

Discharging a student loan debt can be quite difficult compared to other kinds of unsecured debts. However, if you’re able to show that paying off the debts may put you in “undue hardship,” you may be eligible for a student loan discharge. A reliable bankruptcy lawyer can explore your available options and determine the best course of action. 

Attorney Christopher J. Kane has the skills and resources to guide clients through the complexities of discharging student loan debts in bankruptcy. As your legal counsel, Christopher can determine your eligibility for student loan bankruptcy discharge and work to prove undue hardship. 

In addition, Christopher can help file your bankruptcy petition, guide you through the legal steps involved, and represent you during the adversary proceeding. Above all, he will advocate intelligently for your best interests and help you achieve the debt relief you deserve. 

Contact Christopher J. Kane, P.C. today to schedule a free consultation. Attorney Christopher J. Kane can offer you the reliable advocacy and personalized legal counsel you need. From his office in Portland, Oregon, Christopher proudly serves clients in Clackamas County, Washington County, Columbia County, Yamhill County, and the surrounding area.