Student loans are not discharged by a standard Chapter 7 order. To get rid of them you file a separate lawsuit inside the case, an adversary proceeding, and prove that repaying them would impose an undue hardship. Since the Department of Justice changed its approach in November 2022, federal loan cases are settled far more often than they used to be.
Why the discharge order skips them
Section 523(a)(8) of the Bankruptcy Code carves out student loans, federal and private, from the discharge unless the debtor shows undue hardship. The discharge order you receive four months after filing says nothing about them one way or the other. The servicer keeps sending statements. If you do nothing else, you owe what you owed.
The carve-out applies to loans made or backed by the government, loans from nonprofit programs, and any "qualified education loan" under the tax code. Some private loans fall outside those categories: a loan for a non-accredited coding bootcamp, a bar exam loan, a loan that exceeded the cost of attendance. Those can be discharged like any other unsecured debt, and we check each private loan for that before assuming it survives.
Undue hardship, as the Ninth Circuit measures it
The test in California is the Brunner test. You have to show three things: that you can't maintain a minimal standard of living for yourself and your dependents if forced to repay, that this situation is likely to persist for a significant part of the repayment period, and that you've made good-faith efforts to repay. Each element has to be proved with evidence, in a lawsuit, against a lender who can cross-examine you.
For most of two decades, that meant the process was reserved for people with permanent disabilities or truly hopeless circumstances, and even they lost often. The Department of Education fought nearly every case.
What changed in November 2022
The Justice Department and the Department of Education issued guidance telling government attorneys to stop reflexively opposing hardship claims. Instead, the borrower completes a standardized attestation form covering income, expenses, household size, age, health, and repayment history. The government reviews it against set criteria: expenses at or above the IRS standards, a present inability to pay, and factors suggesting that inability will persist, such as being over 65, a disability, chronic unemployment, or having been in repayment for ten years or more without meaningful progress. Good faith is presumed from things like having made some payments or having applied for income-driven repayment.
When the attestation meets the criteria, the government stipulates to a full or partial discharge. No trial. The process still requires filing the adversary proceeding, but the outcome has become predictable enough that we can tell most clients before filing whether they're a likely candidate.
This applies to federal Direct Loans and to FFEL loans held by the government. It doesn't bind private lenders, who still litigate, and it doesn't bind commercially held FFEL loans, though some of those servicers have become more willing to settle.
Who is a realistic candidate
Someone who has been in repayment or forbearance for years, whose income covers rent and groceries and little else, and who has no realistic path to a much higher income. A 58-year-old with $80,000 in loans from a degree she finished in 2001, working retail in Torrance. Someone with a disability that limits work hours. A single parent of three whose income-driven payment is $0 and has been for six years, meaning the loan grows every month and will never be paid.
Who isn't: a 29-year-old with a nursing degree and $60,000 in loans who's between jobs. The government will look at the earning potential and decline, and a judge would apply Brunner the same way.
The process and the cost
The adversary proceeding is filed as a separate case inside the Chapter 7, with its own case number and a filing fee. Your complaint names the Department of Education (or the private lender), and the attestation goes to the U.S. Attorney's office for the Central District, which reviews it and responds, typically within a few months. If they agree, a stipulated judgment discharges the loan. A partial agreement means negotiation. If they refuse, you decide whether to litigate.
The adversary proceeding is not included in our $1,850 flat fee for a Chapter 7 case. We quote it separately, in writing, and only after reviewing your loan history and finances to judge whether the attestation route is realistic. It's not a fee worth paying on a guess, and the numbers, along with everything else a case costs, are on our page on what bankruptcy costs in Los Angeles.
If student loans are your only debt
Then Chapter 7 alone does nothing for you, and we'll say so. The bankruptcy is the vehicle for the adversary proceeding; it doesn't change the loans by itself. Someone with $90,000 in federal loans and $4,000 in credit cards should look first at income-driven repayment, Public Service Loan Forgiveness if it applies, and a disability discharge if it applies, before spending money on a court process. When those have been tried and the balance keeps growing, the adversary proceeding is a real option in a way it wasn't before 2022. We've watched it work for people who'd been told for years it never would.
For most of my career I told people the honest thing, which was that the hardship discharge existed on paper and almost never in practice, and that I wouldn't take their money to try. The 2022 guidance changed what I say. Now I go through the attestation criteria on the call. Age, health, years in repayment, income against the IRS standards. When someone meets most of them, the government has been agreeing, and the thing I used to describe as nearly impossible has become a form with a predictable outcome. That's not something I expected to be able to say.
Questions people ask about this
Are student loans discharged in Chapter 7?
Not by the discharge order itself. You have to file an adversary proceeding and show undue hardship. For federal loans, the 2022 attestation process makes that far more achievable for borrowers who meet the criteria.
What is the attestation form?
A standardized statement of your income, expenses, household, age, health and repayment history that government attorneys use to decide whether to agree to a hardship discharge. If it shows a present and likely future inability to pay, and good faith, they typically stipulate to discharge.
Do private student loans qualify for the same process?
No. The 2022 guidance binds only government attorneys. Private lenders still litigate under Brunner. Some private loans, though, aren't 'qualified education loans' at all and can be discharged outright. We review each one.
Can I file the adversary proceeding after my Chapter 7 is closed?
Yes. A closed case can be reopened to file a hardship complaint, for a fee. If you had a discharge years ago and your circumstances now meet the criteria, that's a path worth discussing.
Does filing Chapter 7 stop student loan collection at all?
During the case, yes. The automatic stay pauses collection on every debt including student loans, so a wage garnishment for a defaulted federal loan stops on filing. After discharge, collection resumes unless the loan was discharged through an adversary proceeding.
Talk it through with the attorney
If you've been in repayment for years and the balance keeps climbing, book a free video consultation and Naomi will walk through the attestation criteria with you to see if you're a candidate.