How do you file a student loan discharge case in bankruptcy?

Why is a separate lawsuit needed?

Student loans are generally not discharged in bankruptcy unless repaying them would impose an undue hardship on you and your dependents. The ordinary discharge order does not decide that question.5

Under the bankruptcy rules, a proceeding to determine whether a debt is dischargeable is an adversary proceeding: a lawsuit within the bankruptcy case that begins by filing a complaint. Federal Student Aid puts it plainly. Discharge of a federal student loan in bankruptcy is not automatic and happens only if you file that separate action.2 3 6 7

What are the steps?

This is the general outline. Several bankruptcy courts have adopted their own procedures for these cases, so check your court's website and local rules too.8

1. Have a bankruptcy case. The adversary proceeding is a lawsuit inside that case.1
2. File a complaint in the bankruptcy court asking it to decide that the student loan is dischargeable because repaying it would be an undue hardship. Either the debtor or a creditor may file this kind of complaint.2 3 5
3. Serve the summons and complaint. When the loan is held by the federal government, the rules for serving the United States apply: copies go by mail to the civil-process clerk at the United States attorney's office in the district where you file and to the Attorney General in Washington, D.C., and also to the agency when a federal agency is sued. A mailed summons must be in the mail within 7 days after it is issued, or a new one has to be issued.9
4. Complete the attestation. Once you start the adversary proceeding, the government attorney should give you the chance to fill out the form. You sign it under penalty of perjury and attach documents that back up your income, such as tax returns or pay stubs.4
5. The government reviews it. The U.S. Attorney's Office for your district handles the case and, with the Department of Education, decides whether to recommend a full or partial discharge.10 1 4
6. The judge decides. Creditors may appear to challenge the request, and the government's position does not bind the court, which makes its own decision on undue hardship.7 4

Is there a deadline?

Not in the national rules. A complaint asking the court to decide whether a student loan is dischargeable may be filed at any time. If your case has already closed and has to be reopened to file it, no reopening fee is charged.3

The attestation has no strict time limit either, though the guidance says the government attorney would ideally ask for it at the outset of the case.4

Your court can still set its own schedule once the lawsuit is filed, and waiting can have practical costs. Ask a lawyer or check your court's local rules before relying on the absence of a deadline.

What does it cost to file?

The bankruptcy court fee for filing an adversary complaint is $350 under the fee schedule effective December 1, 2023, but that fee must not be charged when the debtor is the plaintiff.11

A lawyer's fee is separate. A lawyer who represents you in or in connection with a bankruptcy case must file a statement with the court of what you paid or agreed to pay, and the court can cancel a fee agreement to the extent the fee exceeds the reasonable value of the services.12 13

What can the court decide?

If the court finds undue hardship, Federal Student Aid describes three possible results: the loan is fully discharged, the loan is partially discharged and you repay the rest, or you repay the loan on different terms such as a lower interest rate.7

If the court does not discharge the loan, you still owe it, and you can ask your servicer about other repayment plans.7

Can you do this without a lawyer?

You are allowed to. In the federal courts, parties may conduct their own cases personally or through a lawyer, and individuals can file bankruptcy without an attorney. The federal courts strongly recommend getting advice from a qualified attorney.14 15

This part of a bankruptcy is harder than the forms. It is a lawsuit, you keep the burden of proof on every element, and court staff and judges cannot give you legal advice.4 15

The Justice Department says one goal of its process is to set clear expectations that borrowers understand whether or not they have a lawyer. If you cannot afford one, the federal courts say you may qualify for free legal services.4 15 16