In order for a student loan to be discharged, you first need to file a bankruptcy case (most people file under Chapter 7 or Chapter 13). From there, you have to file a separate lawsuit, called an adversary proceeding, in bankruptcy court. You can bring an adversary proceeding to discharge student loan debt at any time while the case is open, and the case may even be reopened after it is closed in order to file your adversary proceeding.
As with any lawsuit, there is a Plaintiff (that’s the person who brings the adversary proceeding) and one or more Defendants (usually the lender, any servicers, guaranty agencies and, in the case of federal student loans, the government). It is the Plaintiff’s responsibility to meet the legal standard of proving undue hardship in court.
The process begins with the Plaintiff filing and serving a Complaint on the Defendants. Each Defendant gets a limited period of time to file an Answer or risks a default judgment against them. From there, both parties move through a pre-trial process called discovery, which allows both sides to trade documents, information, and collect testimony through depositions. At the conclusion of the discovery phase, the court holds a trial and issues a decision.
The goal of the adversary proceeding is to prove to the bankruptcy judge that requiring repayment of your student loans after bankruptcy would cause an undue hardship on you and your dependents. The problem, however, is that undue hardship means doesn’t always mean what we think it means.