Student Loan Bankruptcy Relief in Texas

Can Bankruptcy Really Help with Student Loans?

For decades, courts treated student loans as almost untouchable. The law demanded proof of "undue hardship," and judges applied it so narrowly that few people ever qualified. Many Texans filed for bankruptcy hoping for a clean start, only to find that their student loans survived the process unchanged.

That approach began to shift under joint federal guidance introduced between 2022 and 2024 by the Department of Justice and the Department of Education. The goal is simple, make decisions fair and consistent. Instead of rigid legal hurdles, courts now consider a borrower's real-world situation: income, expenses, health, age, and repayment history. For the first time in years, Texans have a path to request genuine relief.

How the New Discharge Process Works?

When someone in Texas files for bankruptcy, they can ask the Department of Justice to review their federal student loans. The government studies the borrower’s finances to see if repaying the debt would prevent a basic standard of living or future stability. If the evidence supports hardship, the DOJ may recommend full or partial discharge.

The judge still makes the final decision, but this guidance helps ensure borrowers in Texas are treated the same way as those anywhere else. The process isn’t automatic—each case is carefully reviewed, but it’s far fairer than before.

Who Might Qualify for Student Loan Debt Relief

Courts are more likely to approve discharge when:

Health or age limits the ability to earn steadily.
Payments have continued for many years with no real progress.
Income falls short of essential living costs.
The borrower never obtained the degree tied to the loan.
There’s proof of sincere efforts to repay, consolidate, or seek help.

Meeting one or more of these factors doesn't guarantee success, yet it gives the court clear evidence of hardship. When a full student loan discharge in bankruptcy is denied, Chapter 13 can still offer powerful relief by reducing payments, suspending collections, and shielding wages from creditors.

Private student loans are treated separately and don’t automatically qualify, though some may be reviewed if the lender can’t prove they meet federal standards.

The Weight of Student Debt in Texas

Texas has one of the largest student-loan populations in the nation, with more than three million borrowers. Balances often grow despite years of payment, while housing, medical, and family expenses keep rising. In cities like Dallas, Houston, and San Antonio, many households simply can’t keep up. The updated discharge policy gives borrowers a fair chance to rebuild their finances and look forward again.

DebtStoppers and Your Next Step

DebtStoppers has worked with Texas families through every kind of financial challenge. Our attorneys for student loan debt follow the latest federal guidelines closely so clients understand exactly how the changes may apply to them.

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