Chattanooga Student Loan Bankruptcy Attorney

Helping Students With Debt Through Bankruptcy in Tennessee

Student loans can help relieve the financial burdens associated with a college education, but it’s important to keep in mind that they come with their own financial obstacles. Steep student loan payments can be so high and go on for so long that you may feel it’s impossible to escape them in any reasonable amount of time.

Our lawyers at Tom Bible Law understand how challenging it can be to recover from student loan debt. When you work with us, we’ll make it our obligation to help you through the Bankruptcy Process so you can focus on achieving your financial goals.

The Cost of College Vs. The Student Loan Debt

Most people will tell you the value of a college education. Statistics show that, on average, it can significantly increase your earning potential (typically between 30-50%), lead to more career options, and contribute to steadier employment over the course of your career.

However, a college education is not priceless; in reality, college is extremely expensive. Since 1980, the price of college has increased by more than 150%, and the rate of this increase is 19 times faster than the rate of growth in the U.S. family median income.

Many people turn to student loans to help them pay for college. Unfortunately, despite various programs designed to help people pay off student loan debt, student loan debt has led to a financial crisis in its own right. According to the Federal Reserve Bank of New York, student loan borrowers owed $1.57 trillion in student loan debt as of September 2022.

How Do You Discharge Student Loans Through Bankruptcy?

Although resolving student loan debt through bankruptcy is possible, it’s so difficult that most bankruptcy lawyers won’t even accept cases focused on this type of debt.

There are many legal cases and extensive legislation that pertain to this matter. To simplify the discussion, the main obstacle to discharge is a very restrictive and broad requirement that you must definitively prove your student loan debt causes undue hardship for you and your family. This may sound easy enough, but most courts believe student loans don’t cause such hardships on their own, especially because there are resources for paying them off, namely income-based repayment plans.

What Is the Brunner Test?

The Brunner Test is a legal standard used by the Tennessee bankruptcy court to determine if your student loans qualify for a discharge under the undue hardship exception. To succeed, you must satisfy these three points.

1. You must prove that, based on your current income and necessary expenses, you are unable to maintain a minimal standard of living for yourself and your dependents if you are forced to continue repaying the loans.
2. You must show that additional circumstances exist that indicate your financial situation will continue to persist for a significant portion of the loan’s repayment period. In Tennessee courts, this is often referred to as a “Certainty of Hopelessness.”
3. You must demonstrate that you have made a good-faith effort to repay your loans before filing for bankruptcy. This can include negotiating repayment terms, seeking deferments, or making partial payments when possible.

You will need at least 12-24 months of bank statements, tax returns, and pay stubs in order to prove your case. You cannot simply list the student loans on your bankruptcy petition. You must file a separate lawsuit, known as an Adversary Proceeding, against your loan servicer to trigger the Brunner Test review. The court will look for additional factors, such as permanent disabilities, age, or a total lack of usable job skills, to satisfy the second prong of the test.

What Is the Difference Between Federal Student Loans and Private Student Loans in the Bankruptcy Process?

Both federal and private student loans require an Adversary Proceeding to be discharged, but the path looks very different for each. Federal student loans offer a standardized route that is heavy on paperwork, while private student loans typically require a more aggressive litigation-heavy approach.

Federal Student Loans

Loans owned by the U.S. Department of Education are guided by the Department of Justice and the Department of Education’s streamlined process. Instead of an immediate trial, you must submit a detailed financial form to the DOJ. If your finances meet their undue hardship criteria, the DOJ may choose not to oppose discharging your student loans.

The DOJ presumes hardship if you are over the age of 65, have a long-term disability, or have been in repayment for over 10 years. The courts will determine if you are eligible for the new Repayment Assistance Plan (RAP). Because RAP requires a minimum $10 monthly payment from everyone, you must explain why even this token amount is a hardship to satisfy the Good Faith requirements.

The DOJ review often concludes a few months after you submit your form. It can potentially resolve the case through a stipulation without you ever having to step into a courtroom.

Private Student Loans

Private lenders, like Sallie Mae, do not use the DOJ’s attestation process, and they are often far more aggressive when fighting your discharge.

Private lenders are not obligated to offer income-driven repayment plans. This can actually make it easier to prove that you have no other options, as private lenders rarely offer the same flexible safety nets that federal student loans do.

If your loan was used for something other than qualified higher education expenses or for amounts exceeding the school’s cost of attendance, it may be treated as regular credit card debt and can be wiped out without proving undue hardship.

Unfortunately, you should expect a full legal battle. The lender will likely request your bank statements and deposit testimony to find unnecessary spending to argue that you can afford to pay. They will even claim that a streaming service subscription is a proper display of disposable income.

In both cases, simply filing for bankruptcy does nothing to resolve student loan debt. You must proactively file the Adversary Proceeding lawsuit, or the loans will remain active after your case closes. In a Tennessee court, the judge may have the power to grant a partial discharge. If you can’t wipe out the entire balance, a judge might eliminate part of it, leaving you with a more manageable balance.

Should You Pursue Chapter 13 or Chapter 7 When Filing Bankruptcy for Student Loan Debts?

While Chapter 7 targets a total wipeout of the debt, Chapter 13 has become a sophisticated tool for managing federal student loans under the new One Big Beautiful Fill Act (OBBBA) and the Repayment Assistance Plan.

Chapter 13

This method is often the superior choice for borrowers who do not meet the strict undue hardship criteria but need a long-term plan. Under federal regulations, every month you spend in a confirmed Chapter 13 plan counts as a month of credit toward Income-Driven Repayment (IDR) forgiveness, even if your plan’s payment to the student loan servicer is $0.

You can try to separately classify your student loans to pay them in full while paying other creditors less. However, the 6th Circuit requires you to prove that this doesn’t unfairly discriminate against other unsecured creditors.

For federal student loans disbursed after July 1, 2026, the Repayment Assistance Plan is the primary option. Chapter 13 provides a method to manage the mandatory $10 monthly token payment required by the Repayment Assistance Plan (RAP). This payment has replaced the $0 payment option that was previously available under the SAVE plan.

Chapter 13 provides a 3- to 5-year shield from wage garnishments and bank levies, allowing you to pay down higher-priority debts first.

Chapter 7

This remains the only path to a complete, immediate discharge of student loan debt, but it requires winning an Adversary Proceeding. For federal loans, you can submit the 15-page Attestation Form. If your financial records meet the Brunner Test criteria, the DOJ may stipulate a trial-free discharge. Similar to Chapter 13, if you can prove the student loan was used for non-qualified expenses, it may become dischargeable as standard consumer debt without proving hardship.

You must pass the Means Test. High student loan payments cannot be used as a deduction to help you qualify for Chapter 7, but once you are in, they are the primary target for discharge.

OBBBA Legacy Status

Borrowers with loans disbursed before July 1, 2026, are considered legacy borrowers and may still access older plans, such as income-based repayment (IBR) or PAYE, until 2028. New borrowers after this date are limited to the Standard Plan or the RAP plan.

If you want to take advantage of these legacy borrower plans, you need to move fast. Call a student loan bankruptcy lawyer to get started today.

Contact Our Student Loan Bankruptcy Attorney in Chattanooga Today

We know repayment plans often don’t go far enough to resolve student loan debt efficiently. It is often still possible for these loans, like other ones, to be overwhelming and unmanageable financial burdens. Our office can help you assess your financial situation and determine which type of bankruptcy would be best for you. We will represent your interests throughout the entire case and assist you with the necessary paperwork, including your petition and adversary proceeding.

You shouldn’t have to face the Department of Justice or aggressive private lenders alone. The 2026 legal landscape is complex, but undue hardship is not an impossible standard when you have the right advocacy. Our Chattanooga-based team focuses on the specific nuances of the 6th Circuit to ensure your case is heard by the court. We don’t just file paperwork; we provide a strategic defense against a lifetime of debt. It’s time to stop managing an unpayable balance and start building the future you actually went to school for.

To schedule a free consultation with our Chattanooga student loan bankruptcy lawyers, call 423-874-6628 or contact us online today.