What is undue hardship?

Undue hardship is special or specified circumstances that partially or fully exempts a person from performance of a legal obligation so as to avoid an unreasonable or disproportionate burden or obstacle. In simpler terms, an undue hardship is a set of circumstances that can exempt you from repaying a loan or other obligation.

Some types of debt are not easily discharged in bankruptcy. These include student loans and unpaid taxes, as well as spousal and child support.

To have student loan debt discharged in a bankruptcy filing, your bankruptcy attorney will have to prove that paying the debt causes an undue hardship. Not just a hardship now, but a hardship that is lasting and will never cease.

In proving undue hardship, your bankruptcy lawyer must prove that you cannot possibly make the loan payments now and are unlikely to ever be able to make payments. The bankruptcy attorney must show that you did not, are not, and probably never will benefit enough to repay the student loan from the education you received. This is a serious and extensive test: that you cannot physically perform the work, and also that you cannot write or teach about the work, and that the education cannot be applied to any other field from which you would gain income.

Student loans are typically backed by the federal government or a government agency, even most private loans. That means that the debt is owed to the US government. The student loan debt is similar to an IRS tax debt, and is difficult to discharge in bankruptcy.

To prove undue hardship, your bankruptcy lawyer will file an adversary proceeding in addition to filing for bankruptcy. This is a more complicated process that allows the bankruptcy court to rule on each question separately: to approve or not approve the bankruptcy discharge, and to approve or not approve the student loan discharge. If your bankruptcy case will include student loans that require an adversary proceeding, you will want to consult with a law firm that has experience in arguing for undue hardship.