How to Discharge Student Loans in a Hawaiʻi Bankruptcy
Memberships & Recognition
Can student loans be discharged in a Hawaiʻi bankruptcy?
Yes. Federal student loans can be discharged in a Hawaiʻi bankruptcy, but it takes a separate lawsuit inside the bankruptcy case, called an adversary proceeding. Since November 2022, a streamlined DOJ Attestation Process has made discharge attainable for many federal borrowers, and Hawaiʻi courts decide contested cases under the three-part Brunner test. Private loans follow different rules, explained below, and some can be erased without proving hardship at all. There is no separate court filing fee when the debtor is the one filing the proceeding. I handle federal student loan discharge and do not take private student loan cases.
Student loans are among the most punishing debts a person can carry. Federal student loans have no statute of limitations, and the government can garnish your wages, seize your tax refund, and offset your Social Security, all without ever suing you. For decades, discharging them in bankruptcy rarely happened. That changed in November 2022. A streamlined federal process now makes discharge attainable for many borrowers, and a real share of the borrowers who file get all or part of their loans erased. It is not automatic and it is not guaranteed.
I am writing this guide because so few of the borrowers who could use this path ever try it. After an in-depth study of the 2022 federal discharge process, related statutes, and case law, I am now taking these cases, and I bring more than two decades of Hawaiʻi consumer bankruptcy experience to them. My goal here is to explain, clearly and accurately, who can use this process, how it works, and when it is the right tool, so the people it could help can make an informed decision based on facts, not fear.
Key Takeaways
- Discharge is possible. Student loans can be wiped out in bankruptcy, but it takes a separate lawsuit called an adversary proceeding. A standard bankruptcy discharge is not enough.
- New federal guidelines. The Department of Justice (DOJ) and the Department of Education (ED) introduced a streamlined Attestation Process in November 2022, which opened the door for federal loan borrowers who could not realistically use the old route.
- Some private loans can be discharged. The law protects three kinds of student loans. A private loan that does not fit any of the three is erased like a credit card balance, with no hardship to prove. Whether a loan fits is a document-by-document question, and I do not take private student loan cases.
- The Brunner test. For all other student loans, Hawaiʻi courts use the three-part Brunner test to decide whether repayment is an undue hardship.
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Disclaimer: This guide is provided for informational and educational purposes only. It does not constitute legal advice and does not establish an attorney-client relationship. Bankruptcy law and student loan regulations are highly fact-specific. For guidance on your specific situation, please contact my office. You can start with my free questionnaire or call (808) 468-7000.
Every effort has been made to ensure accuracy, but this guide may contain errors or omissions and is current only as of the date last updated above. The law changes frequently, so confirm any point with my office before relying on it.
Can Student Loans Really Be Discharged?
Student loans can be discharged in bankruptcy, but only through a specific procedure most attorneys do not use. A routine Chapter 7 or Chapter 13 discharge does not, by itself, eliminate student loan debt.
To wipe out a student loan in bankruptcy, you file an adversary proceeding under Federal Rule of Bankruptcy Procedure 7001(f). This asks the court to find that excepting the loan from discharge would impose an undue hardship under 11 U.S.C. § 523(a)(8). Historically, this was so hard to win that fewer than one-tenth of one percent of debtors in bankruptcy even attempted it.
That changed on November 17, 2022, when the Department of Justice and Department of Education issued new joint guidance creating the Attestation Process, which gives qualifying federal borrowers a realistic way to make that showing.
Why Student Loans Are More Dangerous Than Ordinary Debt
Student loans are not like credit cards or medical bills. Two features make them uniquely hard to escape outside of bankruptcy.
- No statute of limitations on federal loans. Ordinary debts eventually become too old to sue on. Federal student loans never do. Congress eliminated the statute of limitations, so the government can pursue them for the rest of your life (20 U.S.C. § 1091a).
- Collection without a lawsuit or judgment. For federal loans, the government does not have to sue you. It can garnish up to 15% of your wages through administrative wage garnishment (my guide to stopping a wage garnishment in Hawaiʻi covers how that is different from an ordinary creditor garnishment), seize your tax refunds through the Treasury Offset Program, and even offset part of your Social Security benefits, all without a court order (20 U.S.C. § 1095a).
Private student loans do carry a statute of limitations and require the lender to sue. But they carry their own risk. Private loans are widely treated as impossible to discharge, and as the sections below explain, that is sometimes wrong. Either way, a bankruptcy discharge ends these debts permanently.
The Finality of Bankruptcy vs. Repayment Plan Volatility
In 2025, the One Big Beautiful Bill Act reshaped federal student loan relief, and not in borrowers' favor. The SAVE plan is gone: a federal court vacated it in March 2026, and the Act eliminates it by statute. PAYE and ICR closed to new enrollment on July 1, 2026, and end entirely by July 1, 2028.
That leaves two income-driven plans: the new RAP, which forgives after 30 years, and IBR, which survives with forgiveness after 20 or 25 years. The Act also phases out the economic hardship and unemployment deferments many borrowers once relied on, and tightens forbearance limits. The safety nets that used to cushion a hard year are shrinking, which makes a permanent bankruptcy discharge more valuable than ever.
A bankruptcy discharge offers something administrative plans cannot: permanence. A federal court order discharging your debt cannot be undone by a change in presidential administration, a new Secretary of Education, or an injunction from another circuit court. It is final, and it removes you from the cycle of administrative limbo.
One distinction is worth understanding. The discharge order itself is permanent, but the streamlined Attestation Process that makes discharge easier to obtain is federal agency guidance, not a statute, and a future administration could narrow or rescind it. That is an argument for acting while the favorable process is in place, not for waiting.
Legal History: How We Got Here
Student loans were freely dischargeable in bankruptcy until 1976. Congress tightened the rules over time, eventually passing the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) in 2005. BAPCPA extended nondischargeability to any qualified education loan, giving private loans the same shield as federal loans for the first time.
Two developments have reopened the door.
- DOJ Attestation Process. The 2022 federal guidance created an objective path to discharge federal loans without contested litigation.
- Court rulings on private loans. Several federal appeals courts have held that § 523(a)(8) shields a narrower set of private loans than lenders long claimed, meaning some private loans can be discharged as ordinary debt.
The Governing Statute: 11 U.S.C. § 523(a)(8)
Section 523(a)(8) protects three separate categories of educational debt from a standard discharge.
| Part | What it catches | Who it usually reaches |
|---|---|---|
| (A)(i) | A loan made, insured, or guaranteed by a government unit, or made under any program funded in whole or in part by a government unit or a nonprofit institution. | Every federal loan. Also some private loans, because they were funded or guaranteed through a nonprofit. |
| (A)(ii) | An obligation to repay funds received as an educational benefit, scholarship, or stipend. | School-issued aid, tuition credits, and some service-obligation programs. |
| (B) | Any other loan that meets the Internal Revenue Code definition of a qualified education loan. | Private loans certified by the school and kept within the cost of attendance. |
The three are independent, and that is the whole point. A loan escapes only if it misses all three. Failing the tax-code test in (B) is not enough by itself, because (A)(i) and (A)(ii) are still there and either one can catch the same loan.
Anything the statute does catch can still be discharged, but only by proving that repayment would impose an undue hardship on you and your dependents.
The Brunner Test in the Ninth Circuit
The Brunner test is the three-part standard the Ninth Circuit, which includes Hawaiʻi, uses to decide whether repaying any other student loan is an undue hardship. Because Congress did not define undue hardship, the courts here apply Brunner, and a debtor must prove all three prongs by a preponderance of the evidence (more likely true than not).
- Minimal standard of living: current income and expenses show the debtor cannot maintain a minimal standard of living while repaying.
- Persistence of hardship: additional circumstances exist showing that this state of affairs is likely to persist for a significant portion of the repayment period. The word that does the work is additional. Being broke today is prong one. Prong two asks what it is about your situation, beyond the current numbers, that makes the court believe it will still be true years from now.
- Good faith: the debtor has made good-faith efforts to repay the loan.
The Ninth Circuit also allows a partial discharge when the full balance causes hardship but a smaller portion can be repaid.
You should be aware that even though Brunner is the local test, it is not the only one. A minority of courts, including the Eighth Circuit and the First Circuit Bankruptcy Appellate Panel, apply a more flexible totality of the circumstances test. That is why reported results from other parts of the country do not always translate to Hawaiʻi, where Brunner governs.
The DOJ Attestation Process
The DOJ Attestation Process is the streamlined federal procedure, established on November 17, 2022, for evaluating federal student loan discharge requests. It works in three steps.
- The mechanism: borrowers complete a standardized, sworn Attestation Form (periodically updated to track the IRS Collection Financial Standards) detailing income, expenses, and repayment history.
- The review: the Department of Education reviews the form against objective criteria set out in the DOJ joint guidance.
- The result: if the borrower qualifies, the DOJ files a stipulation consenting to a full or partial discharge.
Not every case succeeds, and a meaningful number end with no relief at all. Independent studies of the cases filed since the process began disagree about the exact odds, and the plain answer is that no national average can tell you your chances. What I can tell you is whether your own facts fit the criteria the government applies.
What is striking is how few people use any of this. Nationally, only a tiny fraction of borrowers who could benefit ever file, and even many bankruptcy lawyers remain unaware or skeptical that the process works. In Hawaiʻi, too, almost no borrowers have pursued discharge under the new process. The barrier is not that these debts cannot be discharged. It is that almost no one has used the process.
How the Attestation Process Evaluates Hardship
Within the attestation, each Brunner prong has objective shortcuts.
- Prong 1, living standard: expenses are presumed reasonable up to the IRS Collection Financial Standards. If income minus allowed expenses cannot cover a standard 10-year repayment, this prong is satisfied.
- Prong 2, persistence: presumed satisfied if any one of these applies: you are 65 or older; you have a disability; you have been unemployed for at least five of the last ten years; you did not complete the degree; or the loan has been in repayment for more than 10 years.
- Prong 3, good faith: presumed satisfied if you made reasonable efforts to engage with the servicer, such as making payments, requesting forbearance, or applying for income-driven repayment plans.
Two points work in your favor on expenses. You can count reasonable expenses you are currently going without, such as living with family or skipping needed healthcare or childcare, not just what you actually spend. And you can exceed the IRS standard for a category when you have a documented reason, like high medical costs or an unusually long commute.
A spotty payment history is rarely fatal. Not enrolling in an income-driven plan does not show bad faith, especially given the well-documented servicer errors and misinformation borrowers faced. And the COVID-19 payment pause does not count against you.
The Hawaiʻi advantage, and its limit. The IRS standards are localized for housing and utilities by county, and for vehicle operating costs by region, and Hawaiʻi sits at or near the top on both. That makes it easier for a local resident to show negative cash flow than for someone earning the same salary on the mainland. The limit is worth knowing: food, clothing, personal care, out-of-pocket health care and the vehicle ownership allowance are national figures that do not move with the cost of living here. So the advantage is real and it runs through the housing and driving lines rather than through the whole budget.
A major point: these presumptions apply only to the government's settlement decision, not to a trial. The guidance is internal DOJ policy that creates no enforceable rights, and the bankruptcy judge must make an independent finding of undue hardship even when the government agrees to discharge. If the government does not agree and the case goes to trial, you prove undue hardship under Brunner the traditional way.
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Federal vs. Private Student Loans
The discharge path depends heavily on the loan type. The diagram below shows how federal and private loans split into different routes.
A note on scope: my practice covers federal student loan discharge. I do not handle private student loan cases. I explain the private-loan rules below anyway, because you cannot choose the right path without knowing them.
If your loans are private, I cannot take the discharge case itself. But if you are also carrying credit cards, medical bills, or federal loans, a bankruptcy that clears those debts can still change your entire situation, and I can help with that.
Before you read about private loans, read this. I do not handle private student loan cases, and nothing in this section is advice about your loan. Whether a private loan is protected turns on its own documents and facts, and the key questions are not settled in Hawaiʻi courts. Even a loan outside every protection is only erased if you actually receive a bankruptcy discharge, and proving a loan falls outside usually takes a court order. Do not stop paying a loan, ignore a lender, or decide a lawsuit is unnecessary because of anything on this page.
Federal Loans
Loans held by the Department of Education (Direct, ED-held FFEL, ED-held Perkins, and PLUS) qualify for the DOJ Attestation Process. Commercially held FFEL loans and school-held Perkins loans must be consolidated into a Direct Consolidation Loan before filing to qualify.
Qualified Private Loans: Protected, and Harder to Discharge
The first screen a private loan has to clear is the Internal Revenue Code definition of a qualified education loan, under § 523(a)(8)(B). All of the following must be true:
- An eligible student (you, your spouse, or a dependent) enrolled at least half-time;
- At an eligible, Title IV school; and
- Borrowed solely to pay the school-certified cost of attendance, minus scholarships and other aid, and not more than that amount.
If a loan checks every box, it is treated like a federal loan for discharge purposes: it takes a successful Brunner adversary proceeding, and the DOJ process does not apply.
The Other Two Screens
A private loan that fails the tax-code test is not home free. Two other parts of the statute apply on their own terms.
Funded by a government unit or a nonprofit. Section 523(a)(8)(A)(i) reaches a loan made under any program funded in whole or in part by a government unit or a nonprofit institution. Large volumes of private student lending ran through nonprofit guarantors and nonprofit-funded programs, and courts have held those loans protected even though they failed the tax-code test. Whether it applies to your loan is a question about who funded the program, not about what the loan was spent on.
Funds received as an educational benefit, scholarship, or stipend. Section 523(a)(8)(A)(ii) reaches an obligation to repay funds received as an educational benefit. Courts in this circuit have read it narrowly: it does not stretch to cover an ordinary loan of money simply because the money paid for school, and it does reach a tuition credit, or a scholarship that has to be repaid if you leave a program early.
Private Loans Outside All Three: Dischargeable as Ordinary Debt
A private loan that misses all three parts of the statute is not protected at all. That loan is discharged like a credit card balance, with no undue hardship to prove and no Brunner test. It is a real outcome and it is worth checking for, but it takes clearing every screen above, not just the tax-code one.
Federal appeals courts outside the Ninth Circuit have read these protections narrowly, and the question is not settled in Hawaiʻi. Whether any of this applies to a particular loan turns on its documents and facts.
When it is unclear whether a private loan qualifies, the complaint can argue both at once: that the loan is not a qualified education loan and, as a fallback, that repaying it would be an undue hardship. That gives you two independent paths to discharge in a single case.
Chapter 7 vs. Chapter 13 for Borrowers
- Chapter 7: erases most unsecured debt within four to six months, though some debts survive either chapter. It is preferable when you have significant credit card, personal loan, and medical debt as well as student loan debt, and are not trying to save a home from imminent loss. For most borrowers, the attestation route works best through Chapter 7.
- Chapter 13: reorganizes debts into a three to five year plan and halts repossessions, tax levies, and foreclosures. Student loan adversary proceedings can also be brought in Chapter 13, although the process is more complicated due to the time span of the case. If the underlying bankruptcy is dismissed, the court can dismiss the student loan lawsuit along with it, without a hearing.
Completing a Chapter 13 plan does not, by itself, erase a student loan. The discharge you receive at the end of a plan is broader than a Chapter 7 discharge in several ways, but it carries the student loan exception forward unchanged. So a borrower who pays into a five year plan and never files the adversary proceeding finishes the case still owing the loan, with five more years of interest on it. If the loan is the reason you are filing, the adversary proceeding is the case, not the plan. My guide comparing the two chapters walks through the rest of the trade-off.
Which chapter you can file is decided by the means test. The means test is a federal formula that decides whether you can file Chapter 7. It compares your household income to the median income for a Hawaiʻi household of your size. If you are at or below that median, you generally qualify for Chapter 7. If you are above it, a second calculation looks at your disposable income, and you may be directed to Chapter 13 instead. Either way, the means test only decides which chapter you file. It is separate from the undue-hardship test used to discharge the student loan itself. My guide to the Hawaiʻi means test has the current income figures and the exemptions that go with them.
How a Student Loan Adversary Case Works
These cases are filed as adversary proceedings within your main bankruptcy in the U.S. Bankruptcy Court for the District of Hawaiʻi. For federal loans, the defendant is the U.S. Department of Education, and the matter is handled by attorneys from the U.S. Department of Justice's Civil Division working with the U.S. Attorney's Office for the District of Hawaiʻi, who review your attestation and decide whether to stipulate to discharge.
- Evaluation: I evaluate your household finances, life circumstances, and degree status to determine the right legal path.
- Main bankruptcy filed: your underlying case is filed.
- Adversary complaint filed: a complaint is filed against the lender and the servicer (for notice purposes) and, for federal loans, the Department of Education. No filing fee is required.
- Attestation form: submitted under penalty of perjury to the U.S. Attorney's Office.
- Government review and stipulation: the government evaluates the form and, if it agrees, files a stipulated judgment of discharge. If it contests, the case goes to trial.
- Discharge order: the court enters the order, and the servicer must stop collection and update credit reporting.
What Happens While the Lawsuit Is Pending
You do not have to keep making payments while your case is pending. Once your Chapter 7 case is filed, a federal injunction (a binding legal order) called the automatic stay immediately takes effect, halting collection calls and wage garnishments. At the same time, your student loans are typically placed into an administrative forbearance while the adversary proceeding is litigated. Keep in mind that interest can continue to accrue during this forbearance, and that the forbearance is servicing practice rather than a legal protection. The automatic stay itself runs until your discharge, so if the loan case is still open at that point, collection on the loan can resume while it is pending.
What to Gather Before We File
Strong cases are built on documentation. Before filing, I ask you to assemble:
- Federal tax returns and W-2s for the past two years;
- Recent pay stubs and proof of any other household income;
- A current household budget, with bills for rent or mortgage, utilities, food, transportation, and medical costs;
- Loan statements and payment histories for every student loan, federal and private;
- Promissory notes and any school certifications, which determine whether a private loan is qualified;
- Records of prior repayment efforts, such as forbearance, deferment, or income-driven repayment applications; and
- Documentation of any disability, medical condition, or other circumstance affecting your ability to work.
What Does This Cost?
There is no separate court filing fee for the adversary proceeding when you are the debtor bringing it. Attorney's fees depend on the complexity of your case, for example whether the loans are federal or private, whether the government stipulates or contests, and whether the matter goes to trial. I discuss fees openly at the initial consultation and, where possible, offer flat-fee arrangements so you know your cost before we begin.
Want a number for your situation? Call (808) 468-7000 and I will quote your fee at a free consultation, or start with my free questionnaire.
Reopening a Closed Case for Discharge
If you received a bankruptcy discharge years ago, your case can be reopened under 11 U.S.C. § 350(b) to file an adversary proceeding. That said, the National Consumer Law Center's reading of the guidance, which reflects the general consensus, is that the DOJ Attestation Process applies only to cases that were pending on, or filed after, November 17, 2022, not to cases that closed before then. The older route is still open in that situation. The undue hardship standard itself has not changed, so the case is proved under Brunner rather than through the attestation.
Partial Discharge and Settlement Options
Discharge is not always all or nothing. Common outcomes include:
- Full discharge of principal and interest;
- Partial discharge that reduces the balance to a manageable figure;
- Discharge of accrued interest only;
- Modification of loan terms;
- Lump-sum settlement of private loans for a fraction of the balance.
When a discharge is partial, the amount is tied to what you can realistically afford: under the guidance, the remaining balance should be no more than your discretionary income can repay over the loan's remaining term, and a full discharge is appropriate when your expenses equal or exceed your income.
That is the settlement side. If the case goes to trial instead, a partial discharge is not a compromise the judge splits down the middle. The Ninth Circuit grounds it in the bankruptcy court's general equitable authority and requires the court to run the Brunner test against the specific portion of the loan you are asking to have erased. So a partial discharge has to be argued for and proved, the same as a full one, on the part of the balance you cannot carry.
Alternatives to Bankruptcy: Other Ways to Erase Federal Loans
Bankruptcy is not the only route to loan cancellation, and for some borrowers another federal program is faster or simpler. I weigh these options alongside bankruptcy, so you use the right tool:
- Total and Permanent Disability (TPD) discharge: cancels federal loans for borrowers who are totally and permanently disabled, often automatically through a Social Security Administration data match and without a court case.
- Borrower Defense to Repayment: discharges federal Direct Loans when a school misled you or engaged in certain misconduct. The 2022 version of the rule is under a nationwide injunction, so the Department is deciding these claims under its older 1994 and 2016 regulations instead. The program is running; it is the newer, more generous rule that is on hold.
- Closed School discharge: cancels federal loans if your school closed while you were enrolled or shortly after you withdrew.
These programs reach only federal loans, and each has strict eligibility rules. Bankruptcy remains the better, and sometimes the only, tool when your loans are private, when you do not fit a specific program, or when you want a single proceeding that resolves all of your debt at once.
Common Mistakes That Sink Cases
- Filing without the adversary proceeding: a standard bankruptcy does not reach the student loan.
- Skipping the private-loan analysis: assuming every private loan is protected without running all three parts of the statute against it.
- Running only the tax-code test: treating a loan as dischargeable because it fails the qualified education loan definition, without checking whether nonprofit funding or an educational benefit still catches it.
- Filing too early: filing right after taking out the loan undercuts the good-faith requirement.
- Thin expense documentation: sloppy budgeting against the IRS standards sinks otherwise strong cases.
- Settling blindly: accepting a lender's repayment offer before checking whether the loan is legally dischargeable.
Who Typically Qualifies
Every case is unique, but strong candidates often share one or more of these traits:
- Household income at or below the IRS Collection Financial Standards;
- Age 65 or older, or a documented disability affecting earning capacity;
- Did not complete the funded degree, or the degree did not lead to commensurate income;
- A history of attempted repayment, including forbearance or income-driven repayment;
- Loans in repayment for more than 10 years.
Who Is a Weak Candidate (and When to Wait)
An adversary proceeding is usually premature or unwise when:
- You recently took out the loans, which undercuts the good-faith requirement;
- You have strong, stable income or clear earning capacity tied to your degree, so a court is unlikely to find undue hardship;
- You have made no effort to engage your servicer through payments, forbearance, or income-driven repayment;
- Your hardship is real but plainly temporary, with a credible path back to higher income soon.
In these situations, it is often better to wait, build a record of repayment effort, or pursue another remedy first. I will tell you candidly if your case is not yet ready, rather than file a proceeding likely to fail.
Not sure where you stand?
Tell me about your loans and your situation, and I will tell you whether this path fits. The first call is free.
Working With a Hawaiʻi Federal Student Loan Attorney
I have practiced consumer bankruptcy in the U.S. Bankruptcy Court for the District of Hawaiʻi for more than twenty years and have handled more than a thousand cases. I am a Past President of the Hawaiʻi Bankruptcy Bar Association and a former Adjunct Professor of Business Law at the University of Hawaiʻi.
After an in-depth study of the 2022 federal discharge process, related statutes, and case law, I am now taking these cases. These cases rest on the same bankruptcy fundamentals I have applied for more than two decades, put to work on a remedy that, until recently, few borrowers could use.
I represent clients on all islands. If we file, you work directly with me at every stage. I prepare the case myself and appear in the U.S. Bankruptcy Court for the District of Hawaiʻi in Honolulu. To get started, take my free questionnaire or call (808) 468-7000 to schedule a consultation.
Frequently Asked Questions
Can you file bankruptcy on student loans?
Yes. You can include student loans when you file, but discharging them takes a separate lawsuit inside your bankruptcy case called an adversary proceeding.
Does bankruptcy clear student loans?
Not by itself. A standard discharge does not erase a protected student loan. Erasing one takes a successful adversary proceeding inside the case.
What is the DOJ Attestation Process?
It is a streamlined process introduced in November 2022. The Department of Education evaluates a borrower's sworn financial form against objective standards, and if the borrower qualifies, the DOJ recommends discharge to the bankruptcy court.
Can private student loans be discharged in bankruptcy?
Sometimes. The law protects three kinds of student loans, and a private loan that does not fit any of the three is discharged like ordinary unsecured debt, with no undue hardship to prove. The three are the qualified education loan test from the tax code, loans funded by a government unit or a nonprofit, and obligations to repay an educational benefit. Whether a particular loan fits any of the three is a document-by-document question, and I do not take private student loan cases. Do not stop paying a loan on the strength of this answer.
How do you prove undue hardship?
Hawaiʻi applies the three-part Brunner test. You must show an inability to maintain a minimal standard of living, a likelihood that the hardship will persist, and good-faith efforts to repay.
Do I have to be in default to discharge student loans?
No. There is no default requirement. Many successful discharges involve borrowers who were in deferment, forbearance, or income-driven repayment when they filed.
Will I lose my house or retirement savings?
Usually not, and the two are worth separating. On the student loan itself, the guidance tells government attorneys not to give decisive weight to assets that are exempt or hard to convert to cash, and it says asking someone to liquidate a primary home or retirement account should be exceptionally rare. Owning a home or a retirement account does not, in itself, disqualify you. Your property in the bankruptcy case is a separate question with a separate answer: the trustee can sell property that is not covered by an exemption, and that power has nothing to do with the student loan or the guidance. Retirement accounts are protected under their own rules and are rarely at risk. Home equity in Hawaiʻi is the one to look at carefully, and I check it early.
Does my spouse's income count for the DOJ Attestation?
Yes. The Attestation Process and the IRS Collection Financial Standards look at your total household income and expenses. Even if your spouse is not filing and is not liable for your loans, their income factors into whether your household can maintain a minimal standard of living while repaying the debt.
Will I owe taxes if my student loan is discharged in bankruptcy?
No. Debt discharged in a bankruptcy case, including a student loan eliminated through an adversary proceeding, is excluded from your gross income under 26 U.S.C. § 108(a)(1)(A). Forgiveness outside bankruptcy is a different matter. If your loans are forgiven at the end of an income-driven repayment plan, the forgiven amount is now taxable income to you. That difference is worth weighing before you commit to a twenty year plan.
How long does a student loan adversary proceeding take?
A standard Chapter 7 bankruptcy in Hawaiʻi takes roughly four to six months, and the adversary proceeding runs on a separate track inside that case. If the DOJ reviews your Attestation Form and agrees to a stipulated discharge, the student loan matter often wraps up shortly after your main bankruptcy closes. If the government contests it and the case goes to discovery and trial, it can take six months to over a year.
Can you handle the student loan discharge if I file Chapter 13?
Yes. The Bankruptcy Code permits student loan adversary proceedings in Chapter 13. For most borrowers, though, Chapter 7 is the better route: a focused, efficient path that does not tie the litigation to a three to five year repayment plan. Some borrowers can only proceed under Chapter 13, for example when their income or assets make Chapter 7 unavailable. If your situation requires it, contact my office to discuss how I can help.
Do I have to pass the means test to discharge student loans?
Not necessarily. The means test decides whether you can file Chapter 7 at all, by comparing your income to the Hawaiʻi median for your household size. Discharging the student loan is a separate step that turns on undue hardship, not the means test.
Are Parent PLUS loans eligible for the new DOJ process?
Yes. Parent PLUS loans are federal loans held by the Department of Education. If you took out a federal loan to finance your child's education, it qualifies for the same Attestation Process and Brunner analysis as loans for your own degree.
What happens to my co-signer if I discharge a private student loan?
If you discharge a private student loan in Chapter 7, your personal liability is wiped out, but your co-signer remains responsible for the debt. The lender can, and will, pursue the co-signer for the remaining balance. Chapter 13 is different on the timing, and for some borrowers that difference decides the chapter: while a Chapter 13 case is running, the co-debtor stay stops most collection against a co-signer on a consumer debt. Chapter 7 has no equivalent. That protection is not permanent, it ends when the case does, and it can be lifted where the plan does not propose to pay the debt in full. Your co-signer stays liable either way. If someone co-signed for you, tell me at the start, because it changes the analysis.
Will filing bankruptcy stop student loan wage garnishments and tax refund offsets?
Yes. The moment your bankruptcy case is filed, the automatic stay takes effect. It immediately halts administrative wage garnishments, Treasury offsets against your tax refunds, offsets against your Social Security benefits, and active collection calls. One limit is worth knowing up front. That protection runs until your discharge, not until the student loan case ends. If the loan case is still open when your discharge is entered, collection on the loan can start again while it is pending.
How does discharging student loans affect my credit score?
Filing bankruptcy lowers your score at first. What helps afterward is that the delinquent balances stop reporting as past due and the collection activity ends, which are two of the factors credit scoring models weigh most heavily. Recovery depends on what you do next and on what else is on your report, so I will not put a timeline on it. Every client gets the 720 CreditScore program as part of my representation.
Will filing bankruptcy hurt my or my child's future financial aid?
Generally, not for federal aid. By law (11 U.S.C. § 525(c)), government student-aid programs cannot deny you a grant or loan just because of a bankruptcy or a discharged debt. The exception comes from the Department of Education's own regulations rather than from that statute: a PLUS loan can be denied on an adverse credit history, and a bankruptcy discharge counts as one if it appears on the credit report drawn for the application within the preceding five years. You can still qualify with an endorser or by documenting extenuating circumstances.
What if the government will not agree to a full discharge?
Discharge is not always all or nothing. If the DOJ does not recommend a full discharge, it may stipulate to a partial discharge, such as reducing the principal to a manageable figure or wiping out accrued interest. If no agreement is reached with the government or a private lender, the case proceeds to trial before the bankruptcy judge, who has the final authority to grant a full or partial discharge, or deny the request, based on the Brunner test.
How much does it cost to discharge student loans in bankruptcy?
There is no separate court filing fee for the adversary proceeding when you are the debtor bringing it. The waiver turns on who is suing, not on what kind of debt is at issue. Attorney's fees vary with the complexity of the case and whether the government contests it. I review fees at the consultation and offer flat-fee arrangements where possible. My guide to what bankruptcy costs in Hawaiʻi breaks down the rest of the expense.
Can federal student loans be canceled without bankruptcy?
Sometimes. Total and Permanent Disability discharge, Borrower Defense to Repayment, and Closed School discharge can cancel federal loans outside of bankruptcy if you qualify. They reach only federal loans and have strict requirements, so I compare them against a bankruptcy discharge to find the fastest path for you.
How do I find out what kind of student loans I have?
Check two places. Your federal loans are listed in your account at studentaid.gov, which shows each loan's type, balance, and servicer. Private loans do not appear there; you find them on your credit report or in your original paperwork. Knowing whether a loan is federal or private is the first step, because the two follow very different discharge paths.
Should I wait for loan forgiveness instead of filing bankruptcy?
It depends on your timeline and loan type. The newest plan, RAP, forgives after 30 years, while the surviving IBR plan forgives after 20 or 25 years, and Public Service Loan Forgiveness requires 10 years of qualifying payments while you work for a qualifying employer, a definition the Department narrowed in 2026, so it is worth confirming your employer still counts. A bankruptcy discharge can end the debt now and is permanent, not dependent on a program surviving future administrations. There is also a tax difference that used to run the other way: forgiveness at the end of an income-driven plan is now taxable income to you, and a bankruptcy discharge is not. Forgiveness may fit better if you are close to a milestone or work in qualifying public service; bankruptcy is often better if relief is years away, your loans are private, or your hardship is ongoing. I can compare both for your situation.
How long does a bankruptcy stay on my credit report?
The law allows a bankruptcy to be reported for up to ten years from the entry of the order for relief. The credit bureaus voluntarily remove a completed Chapter 13 after seven years, which is their policy rather than a legal limit. The practical impact fades well before either mark, because what weighs on a score is active delinquency and collection activity, and the discharge ends both.
What happens to my student loans if I die?
Federal student loans are discharged when the borrower dies, and a Parent PLUS loan is discharged if either the student or the parent borrower dies, so your estate and family are not asked to repay them. Private student loans depend on the contract: some are forgiven at death, but others can pass to a co-signer or the estate, so it is worth checking the promissory note.
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Key Terms, Explained
- Adversary proceeding
- A separate lawsuit filed inside your bankruptcy case. It is required to discharge a student loan the statute protects, and it is not needed for a loan the statute never reached.
- Undue hardship
- The legal standard a borrower must meet to discharge a protected student loan in bankruptcy.
- Brunner test
- The three-part test the Ninth Circuit uses to decide whether repaying a loan is an undue hardship.
- Attestation Process
- The streamlined DOJ and Department of Education procedure, in place since November 2022, for evaluating federal student loan discharge requests.
- DOJ
- The U.S. Department of Justice, which reviews federal student loan discharge requests and decides whether to agree to a discharge.
- ED
- The U.S. Department of Education, the federal agency that holds and administers federal student loans.
- Qualified education loan
- A loan that meets the Internal Revenue Code definition, which is one of the three ways a student loan can be protected from discharge.
- Section 523(a)(8)
- The Bankruptcy Code provision that excepts educational debt from a standard discharge, through three independent parts. A loan escapes only if it misses all three.
- Automatic stay
- The federal injunction that stops collection, garnishment, and offsets the instant you file.
- Discharge
- The court order that permanently erases your obligation to repay a debt.
- Cost of attendance
- The school-certified total cost of education that sets the ceiling for a qualified private loan.
- IRS Collection Financial Standards
- The federal expense allowances used to measure whether you can maintain a minimal standard of living while repaying.
- Stipulation
- A written agreement filed with the court, here the government's consent to a full or partial discharge.
- Partial discharge
- A court order that cancels part of a student loan balance while leaving an affordable portion in place.
- Means test
- The income formula that decides whether you qualify to file Chapter 7.
- Total and Permanent Disability (TPD) discharge
- A federal program that cancels federal loans for borrowers who are totally and permanently disabled.
- Repayment Assistance Plan (RAP)
- The federal income-driven repayment plan, available since July 1, 2026, that grants forgiveness after 30 years of payments.
- BAPCPA
- The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which extended nondischargeability to private qualified education loans.
- FFEL
- The Federal Family Education Loan program; ED-held FFEL loans qualify for the Attestation Process.
Sources & Legal Authorities
The authorities behind this guide.
- United States Code. 11 U.S.C. § 329; § 350(b); § 362; § 523(a)(8); § 523(a)(8)(A)(i); § 523(a)(8)(A)(ii); § 523(a)(8)(B); § 525(c); § 704(a)(1); § 707(b); § 727(b); § 1328(a)(2); § 1301; 15 U.S.C. § 1681c(a)(1); 20 U.S.C. § 1087ll; § 1091a; § 1095a; 26 U.S.C. § 108(a)(1)(A); § 108(f)(1); § 108(f)(5); § 221(d)(1)
- Other federal. Pub. L. 119-21, § 70119; 34 C.F.R. § 685.200(c)(2); § 685.206(c); § 685.209; § 685.219; § 685.222; U.S. Dep't of Justice and U.S. Dep't of Education, Guidance for Department Attorneys Regarding Student Loan Bankruptcy Litigation (Nov. 17, 2022); Attestation Form; IRS Collection Financial Standards; Judicial Conference Bankruptcy Court Miscellaneous Fee Schedule, item 6
- Rules. Fed. R. Bankr. P. 4007(b); Fed. R. Bankr. P. 7001(f)
- Cases. Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2d Cir. 1987); United Student Aid Funds, Inc. v. Pena, 155 F.3d 1108 (9th Cir. 1998); In re Saxman, 325 F.3d 1168 (9th Cir. 2003);
Legal standards, DOJ guidance, and repayment-plan rules cited in this guide were verified current as of August 15, 2026.
Contact the Law Office of Martin Berger
Law Office of Martin Berger
Serving clients across Hawaiʻi.
Phone: (808) 468-7000
Web: www.martinbergerlaw.com
Office (by appointment, including evenings and weekends): Eaton Square, 438 Hobron Lane, Penthouse 1, Honolulu, HI 96815
Mailing address: PO Box 498, Honolulu, HI 96809
We are a debt relief agency. We proudly help people file for bankruptcy under the U.S. Bankruptcy Code.