For federal student loans, the forbearance program is extended until at least January 31, 2021. This means at least a temporary pass on qualifying loans with no interest for a few more months.

At Cross Stone Law, we only handle bankruptcy cases. We will evaluate your student loan debt for the possibility of discharge as part of a bankruptcy. If the only debt you are struggling with is student loan debt, we can give you a referral to a law firm that focuses only on student loan debt.  Continue reading to learn about the various types of loans affected by this change.

Discharging Student Loans in Bankruptcy

Private student loans

New case law appears to be leaning toward the discharge of certain private student loans. The 5th Circuit Court of Appeals (which governs Texas) recently held private student loans meeting specific criteria under the law can be discharged in bankruptcy. At least one Texas Bankruptcy Court has also made a similar ruling. If you have private student loans, consider contacting a qualified bankruptcy attorney for an opinion on your loans.

Federal student loans

Discharging most federal student loans can be very difficult. In the 5th Circuit, to discharge a student loan in bankruptcy, the borrower has to prove that he will never be able to repay the loan due to circumstances (such as medical) arising after the loan was made. This is called the Brunner test. At least one bankruptcy court (not in Texas) has issued a ruling that seems to be lowering this bar somewhat. Courts have mixed rulings on what this means with all the repayment programs available, some requiring a zero payment.

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