The short answer: Sometimes, yes. It isn’t automatic, though, and it isn’t easy. Federal law says student loans survive bankruptcy unless you can prove that repaying them would cause “undue hardship, ” a demanding standard that South Carolina courts measure with the three-part Brunner test. Recent federal changes have made the process more realistic for some borrowers than the old “you can never discharge student loans” myth suggests.
Student loan payments have a way of following you everywhere. They show up long after graduation, while you’re still trying to cover rent, groceries, and everything else life throws at you. Plenty of borrowers assume bankruptcy can’t help them here. The reassuring news? The law is more nuanced than the rumors. Here’s what a student loan bankruptcy discharge actually involves for borrowers in Greer and across the Upstate.
What this guide covers:
– Whether bankruptcy erases student loans automatically
– The “undue hardship” standard South Carolina courts use
– Recent changes that have made discharge more realistic
– What happens to student loans in Chapter 13 versus Chapter 7
– Common questions about discharging student loans
Does Filing Bankruptcy Automatically Erase Student Loans?
No. Filing alone doesn’t wipe them out. Under current law, a debtor may not discharge a student loan unless repaying it would impose an “undue hardship” upon the debtor and his dependents. That rule lives in Section 523(a)(8) of the Bankruptcy Code.
But the widespread belief that you can “never” discharge student loans isn’t accurate either. Section 523(a)(8) renders student loans presumptively nondischargeable, not completely nondischargeable. And it wasn’t always this hard. Before Congress tightened the rules in the late 1970s, student loans were treated like any other unsecured debt in bankruptcy. Congress narrowed things over the decades, and that history is where much of the myth comes from. The law still allows discharge in the right circumstances. It just asks you to prove it.
What is the “Undue Hardship” Standard in South Carolina?
South Carolina sits in the Fourth Circuit, which uses the three-part “Brunner” test to decide undue hardship. An overwhelming majority of circuits have now adopted the Second Circuit’s three-part Brunner test. The Fourth Circuit adopted the Brunner test for Chapter 7 in In re Frushour, reasoning that the Brunner test best incorporates the congressional mandate to allow discharge of student loans only in limited circumstances. The Brunner test requires a debtor to show that (1) she cannot maintain a minimal standard of living and repay the loans, (2) additional circumstances exist that illustrate she will not be able to repay the loans for a substantial part of the repayment period, and (3) she attempted to repay the loans in good faith.
In plain English, you generally have to show all three of the following.
– You cannot maintain a minimal standard of living for yourself and your dependents if forced to repay the loans.
– Additional circumstances suggest this situation is likely to persist for a significant part of the repayment period.
– You’ve made good-faith efforts to repay.
Honesty matters here. That middle factor is often the hardest to meet. Courts applying Brunner have called it demanding, and some have gone so far as to frame it as requiring a near “certainty of hopelessness” that the debtor won’t be able to repay. That’s a high bar. Not everyone clears it. Most commonly, you can receive a student loan discharge only if you have a serious disability that prevents you from working and you have dependents, or if you are elderly.
Has Student Loan Discharge Become More Realistic Recently?
Yes, at least for federal loans. In November 2022, the Department of Justice and Department of Education issued Guidance for Department Attorneys Regarding Student Loan Bankruptcy Litigation, introducing streamlined standardized procedures. The government now uses a unified attestation form to help standardize undue hardship assessments. After reviewing your attestation form and supporting documents, the DOJ decides whether to support, oppose, or not contest your request.
None of this guarantees an outcome. What it does do is make the path more predictable and less adversarial than before. An academic paper published in the American Bankruptcy Law Journal also found that at least 40% of debtors who included their student loans in their bankruptcy filings received some or all of their student loans discharged. The point isn’t false hope. It’s that the door isn’t bolted shut.
You don’t have to sort through this alone. A confidential consultation with Hart Consumer Law can help you understand whether your circumstances might fit this standard.
How Are Student Loans Treated in Chapter 13 Versus Chapter 7?
The two types of personal bankruptcy handle student loans differently. In Chapter 7, if you cannot pass the undue hardship test, you will still owe the student loans after your Chapter 7 case is over. Even so, Chapter 7 can help by discharging other debts, such as credit card balances and medical bills, which frees up income for your student loan payments.
Chapter 13 works differently. You may be able to pay a reduced amount during the course of your Chapter 13 plan, which takes three to five years. You will still need to repay student loans when the Chapter 13 case is concluded, and your consumer debts are discharged. The loans usually survive. But that breathing room can make a real difference month to month.
Frequently Asked Questions About Discharging Student Loans
Can private student loans be discharged too?
To discharge private student loan debt, the same adversary proceeding and undue hardship standard generally apply. That said, if a loan wasn’t used for education expenses at an eligible school, or it was taken out when you were enrolled less than half-time, it may fall outside § 523(a)(8) and be easier to discharge.
Do I have to file something separate to discharge student loans?
Yes. Discharge requires filing a separate lawsuit, called an adversary proceeding, within your bankruptcy case. An adversary proceeding is the only way the court can evaluate whether your student loans should be discharged. A judge then decides whether to grant a full, partial, or no discharge.
Is bankruptcy my only option for student loan relief?
No. There are other options available. The Department of Education administers income-driven plans. These programs can reduce your monthly payment based on your income and family size. The right choice depends on your full financial picture.
Talk Through Your Options With Hart Consumer Law
Student loan debt is heavy, and the rules for discharging it are genuinely complicated. Struggling with debt happens to responsible people every day, and asking for help is nothing to be ashamed of. Andrew Hart’s practice concentrates on consumer bankruptcy law, guiding individuals and families through their options as they work toward a fresh start.
There are options. Reach out to Hart Consumer Law for a confidential consultation. Call (864) 574-0870. Our office is at 107 Sunbelt Court, Suite 3, Greer, SC 29650, serving Greer and the Upstate.
office@hartconsumerlaw.com 
107 Sunbelt Court Suite 3, Greer, SC 29650 
