A Comprehensive Guide to Filing for Bankruptcy

The Short Answer

Yes. Federal student loans can be discharged in Chapter 7 bankruptcy, and Massachusetts borrowers are in a better position to do it than borrowers in most of the country.

That answer surprises people, because for two decades the conventional wisdom was that student loans are simply not dischargeable. That advice is out of date. Two things changed: the U.S. Department of Justice adopted a standardized process in November 2022 that has produced discharges at rates nobody was seeing before, and the First Circuit, the federal circuit that covers Massachusetts, applies a more forgiving legal standard than most other circuits.

Here is what that actually means for a borrower in Boston, Worcester, Springfield, or anywhere else in the Commonwealth.

Student Loans Are Not Discharged Automatically

Start with the mechanics, because this is where most people go wrong.

When you file Chapter 7 and receive your discharge, credit cards, medical bills, personal loans, and most other unsecured debts are wiped out by the discharge order itself. Student loans are not. Under 11 U.S.C. § 523(a)(8), qualifying student loans survive the discharge unless the court makes a separate finding that repayment would impose an undue hardship on you and your dependents.

To get that finding, your attorney has to file an adversary proceeding, a lawsuit filed inside your bankruptcy case, with its own complaint, its own summons, and its own docket number. Filing Chapter 7 and hoping the loans disappear does not work. Nothing happens unless someone affirmatively files.

Two practical notes on cost. The federal fee schedule exempts a debtor who files the adversary complaint from the standard adversary filing fee, so there is generally no court filing fee for this. And the attorney’s fee for the adversary proceeding is separate from the flat fee for the underlying Chapter 7 case, because it is separate work.

Why Massachusetts Borrowers Have an Advantage

“Undue hardship” is not defined anywhere in the Bankruptcy Code. Congress left it to the courts, and the courts split.

Most federal circuits use the Brunner test, a three-part standard that has been criticized for decades as nearly impossible to satisfy. Brunner requires a debtor to show a present inability to maintain a minimal standard of living while repaying, that this situation is likely to persist for a significant portion of the repayment period, and good faith efforts to repay. Courts applying it strictly have demanded proof of a “certainty of hopelessness.”

Massachusetts is not locked into that standard.

The First Circuit Court of Appeals has expressly declined to adopt any particular test. In Nash v. Connecticut Student Loan Foundation, 446 F.3d 188 (1st Cir. 2006), the court noted the debate over which standard governs and said it had not had occasion to declare its views. That left the question open.

The First Circuit’s Bankruptcy Appellate Panel then filled the gap. In Educational Credit Management Corp. v. Bronsdon, 435 B.R. 791 (B.A.P. 1st Cir. 2010), the BAP rejected Brunner and adopted the totality of the circumstances test, concluding that the totality approach better matches the plain text of § 523(a)(8). The panel found that Brunner reads requirements into the statute that Congress never wrote — in particular the demands for extraordinary circumstances and a separate good faith showing.

Under the totality test, the bankruptcy court weighs:

• Your past, present, and reasonably estimated future financial resources
• Your reasonably necessary living expenses, and those of your dependents
• Any other relevant facts and circumstances unique to your case

That third factor is the important one. It gives the court room to consider your age, your health, your job prospects in your actual field, the value you did or did not receive from the education, whether you tried to negotiate deferment or forbearance, and anything else that bears on whether repayment is realistic.

Massachusetts bankruptcy judges have applied this standard and granted discharges. It is a live, usable path, not a theoretical one.

The law in the First Circuit is not perfectly settled, and some courts within the circuit have still applied Brunner. Which framing your case receives is a question worth analyzing at the outset.

The DOJ Process That Changed the Odds

On November 17, 2022, the Department of Justice, working with the Department of Education, issued guidance creating a standardized process for evaluating student loan discharge requests in bankruptcy. The stated goals were consistency, transparency, and identifying more cases where the government should support discharge instead of fighting it.

Here is how it works.

After the adversary proceeding is filed, your attorney submits a completed Attestation Form to the Assistant U.S. Attorney handling the case. The form is long — roughly fifteen pages of detailed financial disclosure. It walks through three categories:

1. Present financial circumstances. Your income and expenses, measured against the IRS Collection Financial Standards. The current version of the form was updated in May 2025 to reflect annual changes to those standards.
2. Future financial circumstances. Whether your inability to pay is likely to persist. Retirement age, a disability, a chronic medical condition, or a long history of income well below what the degree was supposed to produce all matter here.
3. Past good faith efforts. Payments made, applications for income-driven repayment, deferments, forbearances, and communications with your servicer.

The Justice Department attorney reviews your attestation, confers with the Department of Education, and, if the criteria are met, files a stipulation with the bankruptcy court recommending full or partial discharge instead of litigating against you. When the government stops opposing the case, the outcome changes dramatically.

The Department of Justice’s own reporting after the first year showed a sharp increase in adversary proceedings filed, near-universal adoption of the new process by filers, and relief for the large majority of debtors who used it.

One critical eligibility limit. The guidance applies to loans held by the Department of Education, Direct Loans, plus FFEL and Perkins loans that ED actually holds. If your FFEL or Perkins loans are held commercially, they are outside the process unless you consolidate them into a Direct Consolidation Loan. That consolidation has to happen before you file the bankruptcy petition, because eligibility turns on who owned the loan on the filing date. It also capitalizes unpaid interest and increases your principal.

That single sequencing issue is one of the strongest reasons to talk to a bankruptcy attorney before filing rather than after. Filing first can permanently cost you access to the process.

The guidance covers cases filed on or after November 17, 2022, and adversary proceedings pending as of that date. If your Massachusetts case has already closed, it may be possible to reopen it and file the adversary proceeding.

What the 2026 Repayment Changes Mean for Your Case

For years, the government’s most effective argument against discharge was simple: you do not need it, because you can enroll in an income-driven repayment plan with a $0 payment. That argument is weaker now.

The One Big Beautiful Bill Act, signed July 4, 2025, restructured federal repayment. The SAVE plan was vacated by court order on March 10, 2026 and eliminated by statute. The new Repayment Assistance Plan (RAP) became available July 1, 2026, and it is the only income-driven option for loans first disbursed on or after that date. PAYE and ICR sunset no later than July 1, 2028. Income-Based Repayment survives permanently, and the partial financial hardship requirement for IBR was removed.

Two features of RAP matter directly to a discharge analysis. Unlike the legacy plans, RAP has a minimum monthly payment of $10 — there is no $0 payment no matter how low your income is. And RAP runs for 30 years before any remaining balance is cancelled, the longest timeline of any plan.

For a borrower in their fifties or sixties, on a fixed income, facing a mandatory payment stretching three decades into the future, the “just get on a repayment plan” answer looks very different than it did two years ago. This is exactly the kind of change that belongs in the future-circumstances section of an attestation.

Borrowers who were enrolled in SAVE have been receiving servicer notices and have a limited window to choose a new plan before being defaulted into a standard plan with higher payments. If that describes you, do not let the window close without getting advice.

Who Tends to Have a Strong Case

Based on how these cases are evaluated, the strongest candidates usually share several of these traits:

• A documented disability or chronic health condition that limits the ability to work
• Age near or past retirement, with limited earning years remaining
• Income that has stayed persistently low relative to the debt, over many years
• A degree from a program that closed, lost accreditation, or never produced the earning capacity it promised
• A long, documented history of trying — payments made, IDR applications filed, forbearances requested
• A loan balance that has grown through capitalized interest to a figure that cannot realistically be repaid
• Caring for a dependent with significant medical or support needs

You do not need all of these. Partial discharge is also a real outcome — the government can agree to discharge some of the debt and leave a manageable amount in place.

What This Looks Like in a Massachusetts Case

The typical sequence:

1. Consultation and loan audit. Pull your full loan record from StudentAid.gov. Identify loan types, who holds them, and whether pre-filing consolidation is needed.
2. Pre-filing planning. Handle consolidation if required. Confirm Chapter 7 eligibility under the means test.
3. File the Chapter 7 petition in the U.S. Bankruptcy Court for the District of Massachusetts.
4. Attend the § 341 meeting of creditors.
5. File the adversary proceeding under § 523(a)(8) and serve the government under Rule 7004.
6. Submit the attestation to the Assistant U.S. Attorney with supporting documentation.
7. Government review, in consultation with the Department of Education.
8. Stipulation and court approval, or, if the government does not agree, litigation under the First Circuit’s undue hardship standard.

The base Chapter 7 case moves on its normal timeline. The adversary proceeding runs on its own track and takes longer.

Frequently Asked Questions

Can I discharge private student loans too? Sometimes, and often more easily. Private loans that fall outside the statutory definition of a “qualified education loan” — for example, loans that exceeded the cost of attendance, or loans for programs that were not Title IV eligible — may be wiped out by the ordinary discharge order without any undue hardship showing at all. Every private loan should be analyzed separately.

Do I have to be permanently disabled? No. Disability is a strong fact, but it is not required. The totality test looks at your whole financial picture.

Will this ruin my chances of ever borrowing again? Chapter 7 stays on your credit report for ten years, but most clients see their scores begin recovering within a year or two. Carrying a debt you cannot pay does more long-term damage than a discharge does.

What if my income improves later? A discharge is final. The government cannot come back later and reinstate a discharged loan because your circumstances improved.

My bankruptcy already closed. Am I out of luck? Not necessarily. Cases closed after November 17, 2022 may be reopened so the adversary proceeding can be filed.

How much does it cost? There is generally no court filing fee for a debtor-filed dischargeability complaint. Attorney’s fees for the adversary proceeding are separate from the Chapter 7 flat fee, and we discuss them clearly and up front before any work begins.

Talk to a Massachusetts Bankruptcy Attorney Before You File

The single most costly mistake in these cases is filing the bankruptcy petition first and asking about student loans afterward. Loan ownership on the filing date controls eligibility for the Justice Department process, and consolidation cannot be undone retroactively.

If you are a Massachusetts borrower carrying federal student loan debt you cannot realistically repay, the law is more favorable than it has been in a generation, and the First Circuit’s standard is more favorable than the one applied in most of the country. It is worth finding out where you stand.

Contact The Law Office of Ismail Mohammed LLC to schedule a consultation. We handle Chapter 7 bankruptcy throughout Massachusetts.

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This article is for general informational purposes and is not legal advice. Reading it does not create an attorney-client relationship. Student loan and bankruptcy law changes frequently, and outcomes depend on the specific facts of your case. Consult a licensed attorney about your situation.