For years, student loans were considered almost impossible to erase in bankruptcy. However, in 2025, that’s changing. Thanks to updated federal guidance, borrowers in Mississippi and across the U.S. now have a better shot at getting rid of federal student loans through bankruptcy, especially if they’re struggling financially or dealing with long-term hardship.

What “Undue Hardship” Means and Why It Matters

To discharge student loans in bankruptcy, you have to prove that paying them would cause undue hardship. That means showing you can’t keep up a minimal standard of living while making payments, the hardship is likely to continue, and you’ve tried in good faith to repay the debt.

This test, often called the Brunner Test, was often extremely difficult to meet. But now, borrowers can use simpler documentation to show their situation. You no longer need years of past repayment history or perfect paperwork to prove you tried. Even one positive step, like applying for a repayment plan, may be enough.

New 2024 Guidance Makes Discharge More Accessible

In 2024, the U.S. Departments of Education and Justice released joint guidelines that made the process easier. Borrowers can now fill out an attestation form instead of going through drawn-out court fights. If the Department agrees you meet the standard, they may even support your request for discharge.

So far, the results are promising. As of late 2024, about 85% of processed student loan bankruptcy cases have ended in full or partial discharge. That’s a huge jump from just a few years ago when fewer than 1 in 10 were successful.

What the Process Looks Like in Mississippi

Discharging loans still requires filing bankruptcy, usually Chapter 7 or Chapter 13, and starting a separate lawsuit within the case, called an adversary proceeding. You’ll need to submit financial records and medical documentation (if relevant) and show why repayment would be unfair under your circumstances.

Borrowers in Mississippi may especially benefit if they attended a for-profit school, are living on disability income, or have faced long-term underemployment. The courts will also look at age, dependents, and your chances of earning more in the future.

If your debt feels impossible to manage, contact O’Brien Law Firm to find out if bankruptcy could be a path to relief.

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