Bankruptcy and student loans have long been a complex issue — but 2025 has brought real changes. With rising borrower distress, new federal guidelines, and updated bankruptcy laws, people finally get relief through student loan bankruptcy Pennsylvania?”
If you’re struggling with student loan bankruptcy Pennsylvania, you’re not alone. Thousands of Pennsylvanians are now exploring whether Chapter 7 bankruptcy lawyer in Pennsylvania or Chapter 13 bankruptcy repayment plans can help with student debt. This year’s reforms have put student loan discharge back in the spotlight.
Are Student Loans Dischargeable in Bankruptcy in 2025?
Yes—but it’s not automatic. Under 11 U.S.C. §523(a)(8), bankruptcy student loans are usually excluded from discharge unless you prove “undue hardship.” To do that, you must file a separate lawsuit within your bankruptcy case called an Adversary Proceeding.
In the past, courts rarely granted these requests. But since the Department of Justice introduced new hardship review guidelines in 2022, approval rates have climbed. By 2025, more borrowers are seeing success when they can show serious, long-term financial barriers.
In Pennsylvania, this means that while filing for bankruptcy student loans won’t instantly erase your student loans, but it can open the door to a hardship discharge that’s more achievable than ever.
What Changed in 2025 for Private Student Loan Bankruptcy?
The Private Student Loan Bankruptcy Fairness Act of 2025 created an impact. Until now, private student loans were treated much like federal loans — only dischargeable if you met the high undue hardship standard.
Now, many private student loans can be discharged just like credit card debt in bankruptcy. That means if you file for student loan bankruptcy Pennsylvania under Chapter 7 or Chapter 13, private loans that don’t meet certain “qualified education loan” definitions may be wiped out without proving hardship.
For Pennsylvania borrowers, this shift is huge. Courts are now handling private student loans under the same framework as other unsecured debts, making student loan bankruptcy Pennsylvania a more powerful tool for those with costly private balances.
Understanding Undue Hardship in Pennsylvania Bankruptcy Cases
For federal student loans, the standard is still proving “undue hardship.” In Pennsylvania courts, judges typically apply the Brunner Test, which looks at:
Can you maintain a minimal standard of living if forced to repay?
Will your financial struggles persist long-term (not just short-term setbacks)?
Have you made good-faith efforts to repay your loans?
Hardship can include chronic illness, disability, older borrowers on fixed incomes, or single parents with limited income. Since 2022, the DOJ’s attestation process has also made it easier for honest borrowers to present evidence.
Bankruptcy and student loans, undue hardship is now more achievable for honest borrowers.
Legal Explainer: What Is the Brunner Test?
Think of it as a three-part checklist: survival, future outlook, and effort. If you can show you’ve tried but repayment would keep you below a basic standard of living, you may qualify.
Chapter 7 vs. Chapter 13: Which Is Better for Student Loan Debt?
The two main types of bankruptcy affect student loans are:
| Feature | Chapter 7 (Quick Reset) | Chapter 13 (Payment Plan) |
|---|---|---|
| How bankruptcy student loans are handled | Not wiped out automatically. You must file a hardship case to try for discharge. | Rolled into a 3–5 year repayment plan. Balance usually survives unless hardship is proven. |
| Immediate relief | Possible discharge if you win a hardship case. | Collections stop while you’re in the plan; payments are structured and often lower. |
| Timeline | 3–6 months | 3–5 years |
| Best for | Borrowers hoping for a complete fresh start and able to prove hardship. | Borrowers who need breathing room from collections and want predictable payments. |
Think of Chapter 7 as aiming for a clean break (but only if hardship is proven), while Chapter 13 gives you time and space to get finances under control.
Will Bankruptcy Protect My Tax Refund or Stop Collections in 2025?
The question arises in the right around tax season: “If I file for bankruptcy student loans, will I still lose my refund?” The honest answer is: it depends.
For federal loans in default, the government can grab your refund through something called the Treasury Offset Program. It feels unfair — you wait all year for that money, only to see it vanish overnight.
But here’s the good news: once you file for bankruptcy student loans, the automatic stay usually freezes most collection efforts. That pause includes refund seizures. It’s not permanent, but it does buy you breathing room while your case moves forward.
And in Pennsylvania, there’s another wrinkle. Parts of your refund — especially credits meant to support families, like the Earned Income Tax Credit — may be protected under state law. It’s not a blanket shield, but it can soften the blow.
So, bottom line? Bankruptcy won’t magically erase the IRS’s powers forever. But it can give you a window of relief — and if your student loans eventually get discharged, that refund grab may never come back.
What to Do If You’re Struggling With Student Loan Debt in 2025
If you’re buried under bankruptcy student loans, it’s easy to freeze up and do nothing. Don’t. Even a few small steps can put you in a better spot if you decide bankruptcy might be part of your plan. Here’s where most people start:
Figure out what kind of loans you actually have. Federal and private loans are treated very differently in bankruptcy, and a lot of people don’t realize which is which until they dig out the paperwork.
Pull together proof of your situation. That could be pay stubs, medical records, or just a folder with your loan statements. Judges and trustees like to see you’ve been keeping track.
Think about which chapter fits your life. Chapter 7 is fast but strict, while Chapter 13 is longer and more like a repayment workout. Neither is “better” in every case.
Ask about an Adversary Proceeding. This is the separate filing you need if you want a real shot at getting loans discharged. Not every lawyer explains this upfront, so push the question.
Keep a paper (or digital) trail. Every notice, every collection letter — save them. You’ll be glad you did if the case moves forward.
These steps don’t solve everything overnight, but they do give your lawyer something to work with. And in bankruptcy, preparation often makes the difference between spinning your wheels and getting real relief.
Moving Forward With Student Loan Relief in Pennsylvania
For years, borrowers were told bankruptcy student loans could almost never be discharged. That was true for the most part — but 2025 feels different.
With updated DOJ guidance and new legislation, Pennsylvania filers may finally have a path that courts will take seriously. It’s not automatic, and it won’t be easy. But after years of frustration, real options exist.
A student loan debt lawyer can help you explore them.
Contact Philadelphia Bankruptcy low-cost lawyers today for a confidential consultation.