John Rao, New Process to Discharge Student Loans in Bankruptcy (March 7, 2023)

 A new Guidance from the Department of Justice, issued in coordination with the Department of Education has the potential to change bankruptcy practice dramatically. Until now, attorneys have not thought of bankruptcy as a way to help clients struggling with student loan debt. If the Guidance is implemented as intended, however, more bankruptcy debtors will be eligible for discharge of their student loans. Attorneys will need to become familiar with its terms in order to evaluate their clients’ chances of obtaining an undue hardship discharge.  This document explains in detail the procedures to initiate an undue hardship discharge application pursuant to the new Guidance.