The Department of Justice and the Department of Education have issued new guidance that may make it easier for certain borrowers to discharge their student loans in bankruptcy. The new guidance, which was released in November 2022, clarifies the factors that courts should consider when evaluating undue hardship claims, and it also provides a new attestation form that borrowers can use to support their claims.

Under the Bankruptcy Code, student loans are generally not dischargeable in bankruptcy. However, there is an exception for borrowers who can prove that repaying their student loans would cause them "undue hardship." The new guidance provides more specific guidance on what constitutes undue hardship, and it also makes it easier for borrowers to document their financial hardship.

The new guidance includes three factors that courts should consider when evaluating undue hardship claims:

• The debtor's present ability to repay the loan.
• The debtor's projected ability to repay the loan in the future.
• The debtor's reasonable efforts to repay the loan.

The guidance also provides a new attestation form that borrowers can use to support their undue hardship claims. The attestation form asks borrowers to provide information about their income, expenses, assets, and efforts to repay their student loans.  The form is separate from the bankruptcy and not part of the regular forms or court case.  

The new guidance is a significant development for borrowers who are struggling to repay their student loans. The guidance makes it easier for borrowers to prove undue hardship, and it also provides a new tool that borrowers can use to support their claims.  This is a separate proceeding within the bankruptcy with it's own new case number and hearings.  

If you are considering filing for bankruptcy to discharge your student loans, it is important to speak with an attorney to discuss your options. An attorney can help you understand the law and your rights, and they can represent you in court if necessary.

Here are some of the key takeaways from the new guidance:

• The new guidance makes it easier for borrowers to prove undue hardship.
• The guidance provides a new attestation form that borrowers can use to support their claims.
• The guidance is a significant development for borrowers who are struggling to repay their student loans.

If you are considering filing for bankruptcy to discharge your student loans, it is important to speak with an attorney to discuss your options. An attorney can help you understand the law and your rights, and they can represent you in court if necessary.  Make sure to discuss this additional service with your bankruptcy attorney to see if you may be eligible to proceed with this additional service.