This page was written, edited, reviewed & approved by Emil J. Fleysher following our comprehensive editorial guidelines. Emil J. Fleysher, the Founding Partner, has 15+ years of legal experience as a bankruptcy attorney. Our last modified date shows when this page was last reviewed.
For millions of Americans drowning in student loan debt, bankruptcy has long felt like a mirage; visible but unreachable. The infamous "undue hardship" standard has made discharging student loans in bankruptcy nearly impossible, leaving borrowers trapped in debt cycles that can last for decades. But that's about to change in a big way.
On July 16, 2025, Representative Lou Correa (D-CA) introduced groundbreaking legislation that could revolutionize student loan bankruptcy. The Student Loan Bankruptcy Improvement Act of 2025, backed by 16 co-sponsors, directly targets the most problematic phrase in bankruptcy law: "undue hardship."
This isn't just another political promise. The bill has gained significant momentum, with endorsements from major legal organizations, including the National Association of Consumer Bankruptcy Attorneys (NACBA), the Consumer Federation of America, and the National Consumer Law Center. Even bankruptcy judges are speaking out in favor of reform.
The numbers tell the story of why this matters so much. Nearly 43 million Americans carry student loan debt totaling $1.6 trillion. In Florida alone, hundreds of thousands of residents are struggling under student loan burdens that current bankruptcy law makes virtually impossible to discharge. Many of these borrowers have already tried traditional repayment options, income-driven plans, and forbearance, only to find themselves deeper in debt due to interest capitalization and fees.
To understand why this new legislation matters, you need to understand the Brunner test—the legal standard that has blocked student loan discharge for decades. Named after the 1987 case Brunner v. New York State Higher Education Services Corp, this three-prong test requires borrowers to prove:
The third prong alone has eliminated countless cases, as courts interpret "good faith" incredibly strictly. Borrowers have been denied discharge for missing a single payment, not pursuing every possible forbearance option, or failing to apply for income-driven repayment plans that would still leave them in poverty.
The beauty of this legislation lies in its surgical precision. Rather than overhauling the entire bankruptcy code, it makes one critical change: removing the word "undue" from the hardship requirement. This seemingly small modification would have an enormous practical impact.
Under the proposed law, borrowers would only need to demonstrate "hardship"—a much more reasonable and achievable standard. Bankruptcy Judge Michelle Harner testified before Congress that this change "will reform student loan treatment in bankruptcy" by allowing courts to "rethink the standard" that has proven so problematic.
Professor Douglas Baird, a leading bankruptcy expert, called the approach "surgical" and "an excellent idea" that would enable judges to "press the reset button and reconsider how to strike the balance" between borrower relief and creditor protection.
This change would apply to both Chapter 7 and Chapter 13 bankruptcy cases. In Chapter 7, qualifying borrowers could potentially discharge their entire student loan balance along with other unsecured debts. In Chapter 13, student loans could be included in repayment plans, with remaining balances discharged upon successful completion.
The coalition supporting this reform spans the political and professional spectrum. Beyond the organizational endorsements, individual bankruptcy judges have publicly supported the change, which is a rare occurrence that underscores the severity of the current problem.
The Consumer Federation of America, which represents millions of American families, has highlighted how the current system perpetuates cycles of poverty and prevents borrowers from contributing fully to the economy. The National Association of Student Loan Lawyers has documented countless cases where deserving borrowers were denied relief under the current standard.
Perhaps most importantly, the National Association of Consumer Bankruptcy Attorneys—the professional organization representing the lawyers who handle these cases daily—has thrown its full support behind the reform. These attorneys have witnessed firsthand how the Brunner test fails to provide relief to borrowers who desperately need and deserve it.
The judicial support is particularly significant. Bankruptcy judges, who are bound by current law regardless of their personal views, rarely speak publicly about legislative matters. Their willingness to testify in favor of reform suggests that the current system has become untenable even for those tasked with implementing it.
For Florida residents struggling with student loan debt, this legislation could open entirely new possibilities. The state's bankruptcy courts have generally followed the strict Brunner interpretation, making discharge nearly impossible under current law.
If the legislation passes, several categories of borrowers could benefit immediately. Those experiencing long-term unemployment, chronic illness, or disability would have much stronger cases for discharge. Older borrowers who took on debt later in life and lack the earning years to repay would find courts more receptive to their circumstances.
The change would particularly benefit Chapter 7 filers, who seek complete discharge of debts. Currently, these borrowers often exclude student loans from their bankruptcy petitions entirely, knowing the effort would be futile. Under the new standard, student loans could become a central part of their debt relief strategy.
Chapter 13 filers would also see new opportunities. These borrowers, who typically have some disposable income, could potentially include student loans in their three- to five-year repayment plans, with remaining balances discharged upon completion.
The potential for student loan bankruptcy reform represents the biggest opportunity for debt relief in a generation. But you don't have to wait for congressional action to explore your options. Current law, although challenging, still offers pathways to discharge for borrowers facing genuine hardship.
At Fleysher Law, we've successfully helped Florida residents navigate the complex world of student loan bankruptcy. We can evaluate your specific situation, develop a comprehensive strategy, and fight for the debt relief you deserve. Contact us today for a confidential consultation.
Emil specializes in consumer bankruptcy, debt settlement, and mortgage modification, offering a holistic approach to solving mortgage and debt problems. Emil listens to clients, understands their circumstances and goals, and helps them make the right choices by presenting all options and contingencies.
He is dedicated to helping South Floridians regain their financial freedom from overwhelming debt caused by high interest credit cards, bad mortgage loans, and uninsured medical expenses.
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