What is Undue Hardship?

To have student loan debt discharged in a Chapter 7 bankruptcy or Chapter 13 bankruptcy filing, your bankruptcy attorney will have to prove that paying the debt causes an undue hardship. Not just a hardship now, but likely a hardship that is lasting and will never cease. This is done by filing an adversary proceeding in addition to filing for bankruptcy. If your bankruptcy case in Phoenix, Arizona, requires an adversary proceeding, you will want to hire an experienced bankruptcy law firm, such as Discreet Bankruptcy.

Since student loans – even private loans – are typically backed by the federal government or a government agency, the debt is owed to the US government. The student loan debt is similar to an IRS tax debt, and is difficult to discharge in bankruptcy.

To prove undue hardship, your bankruptcy lawyer will need to prove that you cannot possibly make the loan payments now and are unlikely to ever be able to make payments. Further, the Arizona bankruptcy attorney will need to show that you did not, are not, and probably never will benefit enough to repay the student loan from the education you received. This is an extensive test: that you cannot physically perform the work, and also that you cannot write or teach about the work, and that the education cannot be applied to any other field from which you would gain income.