Can You Discharge Student Loans in Bankruptcy in Florida?
If student loans are a big part of what you owe, you have probably heard the same thing from everyone: “you can’t get rid of student loans in bankruptcy.” It is one of the most repeated lines in consumer debt — and it is not quite true. Student loans are harder to discharge than credit cards or medical bills, but they are not automatically off the table, and the rules around them have shifted in recent years.
Here is how student loans actually work in a Florida bankruptcy, what you would have to prove, and what bankruptcy can still do for you even if the loans themselves survive.
Why Student Loans Are Treated Differently
Most unsecured debt — credit cards, personal loans, medical bills — is wiped out automatically when you receive a discharge. We explain which debts qualify in our guide to what debts can be discharged in bankruptcy in Florida. Student loans are different. Under Section 523(a)(8) of the Bankruptcy Code, they are excluded from discharge unless you can show that repaying them would cause an “undue hardship.” That is why student loans appear on our list of debts that cannot be discharged in bankruptcy in the ordinary way.
The key word is unless. The exception exists in the law, and people do use it.
The Undue Hardship Standard
The Bankruptcy Code does not define “undue hardship,” so courts built their own tests. Most courts, including the federal courts that cover Florida, use a framework known as the Brunner test. To discharge a student loan, you generally have to show three things:
- You cannot maintain a minimal standard of living for yourself and your dependents if you are forced to repay the loans, based on your current income and expenses.
- Your situation is likely to continue for a significant part of the repayment period — in other words, this is not a temporary setback.
- You have made good-faith efforts to repay the loans, such as making payments when you could, or applying for available repayment options.
Just as important is how you raise the issue. Student loans are not discharged automatically in your main case. You must file a separate lawsuit inside your bankruptcy, called an adversary proceeding, and prove undue hardship to the bankruptcy judge. If you never file it, the loans survive your discharge.
What Changed: The DOJ Process for Federal Student Loans
For years, the federal government fought nearly every undue hardship claim, which made these cases expensive and discouraging. In late 2022, the Department of Justice and the Department of Education issued joint guidance to change how government attorneys handle these cases when the loans are federal.
In practical terms, the borrower completes an attestation form describing their finances and repayment history. Government attorneys then review it against the loan records and, where the facts support it, can agree that undue hardship exists and recommend a full or partial discharge to the court. The judge still has the final say, and you still have to file the adversary proceeding — but the process is more predictable and often less costly than a fully contested trial.
One caution: this is internal government guidance, not a change to the law itself. It can be revised, and it does not bind a judge. Because policy in this area has been changing, it is worth confirming how it is being applied before you build a plan around it.
Federal vs. Private Student Loans
Federal loans are the ones the DOJ process was designed for. They are also the loans with the most powerful collection tools behind them — including wage garnishment and Treasury offsets that can reach tax refunds and, in some cases, Social Security benefits. We cover that exception in our guide to whether creditors can take your Social Security or retirement in Florida.
Private loans do not get the DOJ process, so you would be dealing with the lender directly. Still, many private loans fall under the same undue hardship rule. Some private loans that do not meet the statutory definition of an education loan — for example, certain loans not tied to the actual cost of attendance — may be treated more like ordinary unsecured debt. Which category your loan falls into depends on the loan documents, so it is worth having them reviewed rather than assuming either way.
What Bankruptcy Can Still Do If Your Loans Survive
Even if you decide not to pursue a student loan discharge — or you pursue it and lose — bankruptcy can still change your financial picture:
- It eliminates your other debt. In a Chapter 7 case, credit cards, medical bills, and personal loans can be discharged, freeing monthly income that can go toward the student loan payment you actually owe.
- It stops collection while your case is open. The automatic stay halts most collection activity the moment you file, which can give you breathing room. Our guide on stopping wage garnishment in Florida explains how that protection works.
- Chapter 13 can make the loans more manageable. Una Chapter 13 repayment plan can fold your other debts into one structured payment over three to five years, which may leave more room in your budget to stay current on student loans going forward.
None of this wipes out the student loan on its own, but for many people the combination of clearing other debt and stopping collection is what makes the loan payment finally affordable.
Is Pursuing a Student Loan Discharge Worth It?
An adversary proceeding is real litigation, with added time and cost on top of your bankruptcy case, so it is worth being honest about whether your facts fit. These cases tend to be strongest when:
- Your income is low relative to your household expenses, and that is unlikely to improve soon
- You have a disability, a serious health condition, or other long-term limits on your ability to earn
- You have dependents who rely on your income
- You can document real efforts to repay or to use available repayment programs
- You are older and close to retirement with limited earning years left
If your income is likely to grow, or you have not yet explored repayment options, a discharge claim becomes harder to win. Partial discharge is also possible in some cases, which can be a meaningful result when balances are large.
Start With the Full Picture of Your Debt
Whether bankruptcy makes sense when student loans are involved depends on how much of your debt they represent, what else you owe, and where your income is headed. Before filing, it also helps to confirm that you qualify — see our guide on whether you qualify for bankruptcy in Florida — and to compare every debt relief option available to you.
Alexis Garcia Legal helps individuals and families throughout Miami, Doral, and South Florida understand exactly where student loans fit into their bankruptcy options. We will review your loans, your other debts, and your budget, and tell you plainly whether pursuing a discharge is realistic or whether another strategy serves you better.
Call us today at (305) 428-2858 or schedule your free consultation online. Every consultation is confidential and available in English or Spanish.
Se habla español.
Disclaimer: This blog post is for general informational purposes only and does not constitute legal advice. Student loan policy and bankruptcy procedures change, and every situation is different. Please consult with a qualified Florida bankruptcy attorney for advice specific to your circumstances.
Deja una respuesta