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In the old law, which the nonprofit companies granted student loans  were not taxable, unless the debtor could show undue hardship. Under the new law extends this rule to all student loans made by non-profit or commercial entities.

To release your student loans on the basis of undue hardship, you must submit a separate act of bankruptcy court and get a court order in your support of this concern. Normally, that an act releasing an student loan debt includes services of a lawyer. Although it is also possible to do it yourself if you’re willing to put in your time and effort.

In determining undue hardship, looks most bankruptcy courts on three factors such as poverty, diligence against poverty, and good faith. If you can show that all these aspects are there, it very likely give you an undue hardship release of your student loans.

Courts rarely let student loans be discharged. They take the position that Congress must loans must be repaid. They also know that federal student loans, involving a lot of elasticity on the creditor side, including the cessation of payments, interim payments reductions and extensions of the repayment tenure to lower the monthly payments to a reasonable amount.

In some cases, courts have held that it would be an unfair burden to repay the entire loan and relieve defaulter of a portion of the debt. Other courts prefer to either discharge the loan in full or none of it is discharged.