Chapter 7 Bankruptcy: The Two Tests Used To Prove Undue Hardship for Student Loans

10 June 2015
 Categories: , Blog


Getting an education to further your position in life is expensive. As of 2014, 40 million Americans have resorted to taking out student loans to pay for their degree; however, with the economy in a poor state, finding a job after graduating to pay off your student loans may not be easy. As time passes, the financial hardship that paying off the student loans and their interest causes may become unbearable. For a lawyer to discharge student loans under chapter 7 bankruptcy, they must prove that the student loans cause undue financial hardship, which is generally measured using two tests—the Brunner test and the Totality of the Circumstances Test.

The Basics of the Brunner Test

Some courts will use the Brunner test to determine whether applicants are eligible for getting their student loans discharged. There are 3 parts to the Brunner test. To be eligible for discharging your student loans when applying for chapter 7 bankruptcy, you must meet all of the three criteria. They include:

  • Living in standards below the poverty line. Each year, the US Census Bureau will issue a report detailing what the poverty line for that year is. For example, the poverty threshold for an individual under the age of 65 living on his or her own was $11,011 in 2012.
  • Dealing with a persistent financial situation. The court will also need to confirm that your financial situation will not likely change in the near future; for example, you are not going to receive a large inheritance or be offered a job position that pays well over the poverty threshold.
  • Having had good faith in making payments. This basically means that you made an effort to pay your student loans back on time.

The Fundamentals of the Totality of the Circumstances Test

Not all courts rely on the Brunner test. Those who don't generally rely on the Totality of the Circumstances test, which doesn't have set requirements that must be met. Instead, the court will examine all of the relevant factors that pertain to your case to determine whether the student loans cause you undue financial hardship.

You or a chapter 7 bankruptcy attorney will need to prove that not only are you unable to pay back your loan based on your financial situation currently and in the foreseeable future, but also that the loans will cause an unconscionable burden on your life.


Speak with a bankruptcy attorney to determine whether you may have a case at getting your student loans discharged with a chapter 7 bankruptcy filing. If you are not eligible, you will still be responsible for paying back the student loans after being discharged from bankruptcy. Contact a lawyer, such as one from Brackett & Strunk LLC, if you have more questions.