On Behalf of Janus Law
Quick Summary
Student loans are still not automatically discharged in bankruptcy, even in 2026. A borrower still has to file bankruptcy, bring an adversary proceeding, and show undue hardship. What changed is that the Department of Justice and Department of Education adopted a standardized process for federal student-loan discharge cases, including an attestation-based review that can make legitimate hardship cases more straightforward to evaluate.
For years, people treated student loan bankruptcy like a dead end.
Not difficult.
Impossible.
That was never fully true, but it also was never easy. The reason this topic matters now is that something real did change. The change was not a new Bankruptcy Code section wiping out student loans overnight. The change was a federal guidance and review process designed to make hardship-based discharge cases more consistent.
That distinction matters because it changes what borrowers should do next.
What Did Not Change
The core rule is still in the Bankruptcy Code.
Under 11 U.S.C. section 523(a)(8), student loans and certain other education debts are not discharged unless keeping the debt in place would impose an undue hardship on the debtor and the debtor’s dependents.
That means student loans still do not disappear automatically in an ordinary Chapter 7 or Chapter 13 filing.
A borrower who wants a student loan discharge still has to ask for it.
What Did Change
The Department of Justice, working with the Department of Education, adopted a standardized process for federal student-loan discharge cases in bankruptcy.
According to the U.S. Trustee Program, that process was created to provide consistent expectations, reduce the burden on debtors, and make it easier for Justice Department attorneys to identify cases where discharge is appropriate.
That is the practical shift people are talking about when they say the rules changed.
It is not a promise of discharge.
It is a clearer road map for how federal hardship cases are reviewed.
You Still Need an Adversary Proceeding
This is the part many articles skip.
Federal Student Aid states that a borrower seeking to discharge federal student loans in bankruptcy must file a separate action, called an adversary proceeding, and ask the bankruptcy court to find that repayment would impose an undue hardship.
So even under the newer federal process, the path is still more involved than discharging ordinary credit card debt or medical debt.
That matters for California filers because timing, paperwork, and the rest of the bankruptcy strategy still have to be right.
The Current Hardship Factors Are Still the Real Question
Federal Student Aid explains that bankruptcy courts do not use one single nationwide test, but they may look at three familiar hardship questions:
- whether the borrower could maintain a minimal standard of living if forced to repay
- whether the hardship is likely to continue for a significant portion of the repayment period
- whether the borrower made good-faith efforts to repay before filing
The Department of Justice guidance uses the same basic framework. It tells Department attorneys to recommend discharge when the facts show present inability to pay, likely persistence of that inability, and good faith.
That does not mean every borrower wins.
It does mean the review is no longer supposed to depend entirely on scattershot litigation positions from one case to the next.
The Federal Process Now Uses an Attestation
This is one of the most important practical changes.
The DOJ guidance includes a student-loan attestation form, and the Department of Education supplies account history and loan details for the review.
In plain English, the borrower is no longer walking into the case with nothing but a vague hardship argument. There is now a more formal framework for gathering facts about income, expenses, household circumstances, repayment history, and the loan record itself.
That can matter a lot in legitimate hardship cases.
Possible Outcomes Are Broader Than “Win or Lose”
Federal Student Aid explains that an undue-hardship ruling can lead to more than one result.
Depending on the court’s decision, a borrower may receive:
- a full discharge
- a partial discharge
- modified repayment terms ordered through the bankruptcy outcome
That is important because some borrowers assume the case is only worth filing if every dollar will be erased. That is not always the right way to look at it.
If a bankruptcy case can materially reduce the student-loan burden or improve the terms enough to make life workable again, that may still be a meaningful result.
Federal Loans and Private Loans Are Not the Same Discussion
The current DOJ and Department of Education guidance is about federal student-loan bankruptcy litigation.
Private student-loan issues can involve different dischargeability questions, different defenses, and different litigation positions. Some private education debts fit cleanly within section 523(a)(8). Others may require a closer legal analysis of what kind of debt the lender is actually trying to protect.
That is one reason a borrower should not lump all student debt into one category and assume the answer will be identical for every loan.
Why This Matters Even More When Student Loans Are Not the Only Problem
In real cases, student debt is often not the whole crisis.
By the time someone asks this question, there may also be:
- credit card balances
- personal loans
- collection lawsuits
- tax debt
- medical debt
- wage or bank-account pressure
That means the bankruptcy strategy has to do two jobs at once. It has to deal with the broader debt load and, if student loans are part of the picture, decide whether an adversary proceeding makes sense.
Janus Law often reviews this issue together with the Chapter 7 analysis because a borrower may need to understand both how Chapter 7 works and whether the case should include a hardship challenge instead of assuming the student loans automatically survive unchanged.
Why California Borrowers Should Not Assume They Are Stuck
There are still plenty of cases where student loans will not be discharged.
That is the truth.
But the old “nobody gets rid of student loans in bankruptcy” advice is also not a safe shortcut anymore. The current federal process exists because the government itself recognized the need for a more consistent way to evaluate legitimate hardship claims.
For some borrowers, that may justify taking a second look at bankruptcy when the old answer was simply “do not bother.”
When Chapter 13 May Still Matter
Some borrowers are not good Chapter 7 candidates because of income, home-equity issues, or the need to catch up on secured debt.
In those situations, Chapter 13 bankruptcy may still be the right main case, even though the student-loan hardship issue remains its own separate fight. The student-loan question does not replace the need to choose the right chapter. It sits inside the larger bankruptcy strategy.
What Janus Law Reviews Before Giving an Answer
The right answer usually turns on facts, not slogans:
- Are the loans federal, private, or mixed?
- Is the borrower already headed into Chapter 7 or Chapter 13 for other reasons?
- What does the household budget actually look like?
- Is the hardship temporary, or does it appear likely to persist?
- What does the repayment history show?
- Will the student-loan issue be worth litigating as part of the larger case?
Those are the questions that matter in 2026.
The Bottom Line
Student loans are still not automatically discharged in bankruptcy. A California borrower still has to file bankruptcy, bring an adversary proceeding, and prove undue hardship.
But the federal process changed in a meaningful way. The Department of Justice and Department of Education now use a standardized framework, including an attestation-based review, to evaluate when discharge is appropriate. That does not make relief automatic. It does make the old “never” answer less reliable than it used to be.
If student-loan debt is part of a larger financial collapse, Janus Law can help you review the full picture and whether bankruptcy may offer a path forward. The firm serves the San Fernando Valley and Inland Empire from offices in Mission Hills and Riverside. Call (818) 672-1778 or schedule a consultation.
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