Bankruptcy: Discharging Student Loans in 2026

The Undue Hardship Standard

Historically, discharging student loans in bankruptcy was practically impossible due to the "undue hardship" standard required by the Brunner Test. Borrowers had to prove a "certainty of hopelessness."

The Department of Justice Pivot

Recently, the Department of Justice, in coordination with the Department of Education, issued new guidance to bankruptcy courts instructing federal lawyers to stop aggressively fighting borrowers who genuinely cannot pay.

Under the new adversarial proceeding framework, borrowers submit a 15-page attestation form detailing their expenses, income, and attempts to repay the loan. If the numbers clearly show the borrower cannot maintain a minimal standard of living, the DOJ will stipulate to the discharge without dragging the borrower through years of litigation.

If you are exploring Chapter 7 or Chapter 13 bankruptcy, you must demand that your attorney files the specific "Adversary Proceeding" for your student loans. Do not assume your bankruptcy automatically covers them.