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Discharge

To legally cancel or eliminate a debt, meaning the borrower is no longer obligated to pay it.

Undue Hardship

A very strict legal standard required to cancel student loans in bankruptcy, usually meaning the borrower cannot maintain a minimal standard of living, this condition is likely to persist, and they've made good faith efforts to repay the loan.

Bankruptcy

A legal process for individuals or businesses to eliminate or repay some or all of their debts under the protection of a federal court.

Brunner Test

A three-part legal test used by most bankruptcy courts to determine if a student loan borrower meets the "undue hardship" standard. It requires proving: 1) the borrower cannot maintain a minimal standard of living, 2) this situation will likely persist, and 3) the borrower has made good faith efforts to repay.

Means Test

A formula used in bankruptcy to determine if a debtor has enough disposable income to repay some of their debts, influencing whether they can file for Chapter 7 (liquidation) or Chapter 13 (repayment plan) bankruptcy.

Fresh Start

A core principle of bankruptcy law, aiming to give debtors an opportunity to eliminate overwhelming debt and begin anew financially.