Steps to Discharge Student Loans in Bankruptcy [Updated 2025]

Quick overview of discharging student loans in bankruptcy

To get your student loans discharged in bankruptcy, file an adversary complaint with the court, including a detailed NSLDS report of your loans, and serve it to the relevant parties, such as the U.S. Attorney and your loan servicer. Complete an attestation form outlining your income, expenses, and inability to repay, while demonstrating good faith efforts like making payments, applying for deferments, or enrolling in income-driven plans. The Assistant United States Attorney will review your case and make a recommendation, but the final decision rests with the bankruptcy court, which may hold a hearing before determining whether to grant a full, partial, or no discharge of your student loans.

If you’ve filed for bankruptcy and want to explore the possibility of discharging your student loans, this guide outlines the essential steps you’ll need to follow. Discharging student loans isn’t automatic and requires additional legal procedures. Below, we break down the process in an easy-to-follow format.

Step 1: File an Adversary Complaint

The journey toward discharging your student loans begins with filing an adversary complaint. This document initiates the adversary proceeding, a separate legal action within your bankruptcy case.

• How to File:
  Submit your complaint to the court clerk. Many courts accept electronic filings, but if you need to file in person, include a cover letter (available as a court-provided PDF).
• Required Documentation:
  Attach your National Student Loan Data System (NSLDS) report. This report lists all your federal student loans and can be obtained online.

An Assistant United States Attorney (AUSA) will represent the Department of Education and review your adversary complaint alongside your attestation form.

Step 2: Serve the Complaint on Relevant Parties

Once your complaint is filed, it must be “served” to specific parties to notify them about the adversary proceeding. Here’s who should receive it:

1. The U.S. Attorney for the district where your bankruptcy was filed.
2. The Attorney General of the United States, Department of Justice.
3. Your student loan servicer (e.g., the Department of Education).
4. The U.S. Trustee for your district.

Serving the complaint can be done through mail or in person. Include a copy of the summons with each delivery.

Step 3: Complete the Attestation Form

The attestation form is crucial for demonstrating undue hardship and includes the following sections:

Income and Expense Information

• Income Details:
  Document your household gross income, Social Security benefits, unemployment income, or other financial sources.
• Expense Details:
  Include living costs like housing, transportation, childcare, uninsured medical expenses, and other essentials. Use recent pay stubs, bank statements, bills, and transaction histories for accuracy.

Present Ability to Pay

Calculate your gross income minus your allowable expenses. If no funds remain after this calculation, it indicates an inability to repay the debt.

Future Ability to Pay

Provide information on your future financial prospects. Situations like advanced age, chronic disabilities, prolonged unemployment, or loans in repayment for over 10 years can strengthen your case. If your circumstances don’t align with these criteria, explain them in the space provided on the form.

Evidence of Good Faith Efforts

Show the court you’ve tried to manage your debt responsibly. Examples include making payments, applying for deferments or forbearance, enrolling in income-driven repayment plans, or consolidating loans. Demonstrate efforts to maximize income and minimize expenses.

Step 4: AUSA Reviews and Makes a Recommendation

The AUSA will analyze your attestation form to assess whether the undue hardship standard has been met. They’ll provide their recommendation to the bankruptcy court. While this recommendation isn’t binding, it holds significant weight in the court’s decision.

Step 5: The Bankruptcy Court Issues a Decision

The bankruptcy judge will review the evidence and may schedule a hearing to gather additional information. These hearings are often held virtually.

• What to Expect:
  Be prepared to answer questions from the judge and clarify any uncertainties.
• The Outcome:
  The court will decide whether to discharge all, part, or none of your student loan debt. If you disagree with the decision, you can appeal.

Final Thoughts

Discharging student loans in bankruptcy is a complex process that requires thorough preparation and adherence to specific legal requirements. However, with persistence and proper documentation, you can present a compelling case. If you’re unsure where to begin, consider seeking guidance from organizations like Upsolve or consulting a bankruptcy attorney to navigate the process.

By following these steps, you’ll be one step closer to achieving financial relief and moving forward with your life.

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What Is “Undue Hardship” in Student Loan Bankruptcy? [Updated 2025]