What is the test for discharging a student loan in bankruptcy?

Is it even possible?

Student loans are non-dischargeable, right?

WRONG !!

On this week's episode, Shawn is back solo again (we'll hear George back again for next week's episode) interviewing attorney Jeff Hakanson. Jeff has been an attorney for thirty (30) years! He granduating with his J.D. from South Texas College of Law and has practiced bankruptcy for his entire career.

On November 17, 2022, the U.S. Department of Justice issued a memorandum on student loan discharges. What normally fell under the Brunner case and a Totality of Circumstances argument has now been streamlined by the US DOJ to assist in discharging student loan debts under certain circumstances, some of which include:

• The borrower is over 65;
• The borrower has a disability;
• The borrower has been unemployed 5 of the last 10 years;
• The borrower has attempted repayment in good faith.

Typically these discharge cases are started with the filing of an Adversary Proceeding (with no fee if related to Student Loans) and then the debtor / borrower and attorney complete a "litigation package" with certain "attestations." If the DOJ agrees, then the student loans can be discharged, or maybe modified in some capacity.

The memorandum was designed to allow borrowers more clarity on discharging federally backed student loans (not private loans).

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