Student Bankruptcy doesn't discharge the student loans. Infact, student loans are not discharged in any bankruptcy
unless they are proved to be an '"undue hardship"'. People have declared them unjustly
to be completely non-dischargeable

as they don't provide steps for proving them as an undue hardship. It is great
frustration for some one who is already in debt and has to pay the student loans
too or don't get these loans discharged in a bankruptcy. This article will provide
you complete details about how to get them discharged in a student bankruptcy, compromise
or write-off.

Student Bankruptcy -- What The Court Does?

Previously, student bankruptcy courts have always treated these loans as unsecured debts. Chapter 7 could get these loans fully discharged. In 1976, congress came up with a reform in Higher Education Act of 1965. This reform stated that for any student loan to be discharged it should meet the following requirements;

• At the time of filing the student bankruptcy, the debt must already be due more than five years. This rule was changed in 1990 and the time frame was increased to 7 years. In 1998 this rule was completely eliminated and now only the second point has to be proved true.
• If debtor is unable to pay the student loan, it will become an undue hardship for him.

Student Bankruptcy -- "Undue Hardship" Analysis

There has been a long debate on student bankruptcy undue hardship topic between Department of
Education attorneys and the court. However, a rigid decision was taken by the
court. The decision implies a debtor to be living below Federal Poverty Guideline.
Also, the debtor must not have disposable income to repay any debts. In this
case the student loan will get discharged in student bankruptcy otherwise
not.

Student Bankruptcy -- Tests to identify "Undue Hardship" factor

The courts have developed a number of tests to determine the student loan to be indeed an undue hardship or not. These tests include Brunner Test, Totality of the Circumstances Test, Johnson Test and Bryant Poverty Test. By these tests some common characteristics are calculated which in turn help to calculate the undue hardship factor. These characteristics are described below.

Student Bankruptcy -- Characteristic A

The first characteristic of student bankruptcy is the debtor's ability to repay the loans due to
his current living status. The debtor should also be able to meet his necessary
living items. The living condition is evaluated in the light of Federal Poverty
Principles. If a person filing
student bankruptcy is above poverty level then his monthly expenses are brought
to a minimum level. After this the court assesses the probability of repayment
that if the debtor repays would this repayment pushes him below the poverty
level? If yes then the student loan is an undue hardship.

Student Bankruptcy -- Characteristic B

This factor involves the prediction about the debtor repaying his debts. This factor is controversial as no one can actually make a correct decision whether the debtor will be able to pay in future or not. The courts in this regard have involved the following factors to calculate the inability of a person to repay the student loan. These are;

• Medical issues
• Dependent's support
• Skills to manage a better job
• Age (50 years and above)
• Social and cultural causes that refrain a person from getting a better job

Student Bankruptcy -- Characteristic C

This factor is to evaluate the good faith in repayment. It means that a debtor tried his best utilizing all means to repay the debt but was still unable to repay it. People who entered student bankruptcy right after graduation to erase their student loans instead of repaying it faced troubles in the court. They have to show that they tried but the matter is out of their hands to get the loans discharged.