What Is Partial Discharge?
Courts can reduce your balance without eliminating it entirely. If you cannot repay the full amount but could repay some portion, the court may discharge part. For example: $80,000 reduced to $30,000.
How Courts Calculate It
Considerations: current and projected income, necessary expenses, original amount vs. amount paid, interest accrued, and sustainable payment amount. Some use a formula; others exercise broader discretion.
Strategic Value
Even partial discharge can be transformative. Reducing $80,000 to $30,000 makes the difference between permanent default and a manageable payment. Interest stops accruing on the discharged portion.
Frequently Asked Questions
Is partial discharge better than IDR?
Often yes. IDR stretches 20-25 years with potential tax consequences. Partial discharge is immediate, permanent, and tax-free (discharged in bankruptcy). The remainder is manageable.
Can I get partial discharge of private loans?
Yes. The same undue hardship standard applies. Private lenders may settle rather than fight.
What happens to the remaining balance?
You must arrange repayment with the lender -- original terms, modification, or IDR for federal loans. The court may set repayment terms.
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