Bankruptcy is Finally an Option for Federal Student Loans

Here’s a news clip on this topic that ran yesterday:  https://www.youtube.com/watch?v=77xsEU7rFM0

It’s a good short 2 minute summary of what this means and well worth a listen!  I haven’t seen this in the news much and we really need to get the word out because in my 30 years of practice, I see this as finally working to discharge significant federal student loan debt.

So how are we starting on this to get our student loan and bankruptcy clients discharges in 2023?

Well, this afternoon, Barbara and I, are attending a three hour webinar learning about the new rules for discharging federal student loans in bankruptcy!  NACBA, with allies at NCLC, the Student Borrowers Protection Center and others have been working for more than year with folks at the Departments of Education and Justice on this reimagined and liberalized guidance for the application of the Brunner Test.

This is the most significant change regarding student loans and bankruptcy since 2005, when private student loans were made nondischargeable. Up until this month, the current bankruptcy law treats student loan borrowers who face severe financial difficulties in the same, severe manner as people trying to escape child support payments, alimony, overdue taxes, and criminal fines.

So if you have student loan debt and it seems that all these other programs including the 10k forgiveness aren’t helping you, then please reach out to us to discuss your new options.