Administrative Order FLMB-2026-4
Dated: August 4, 2026 (original program implemented July 15, 2026)
Summary:
The United States Bankruptcy Court for the Middle District of Florida, through Chief Judge Jacob A. Brown, has adopted an innovative Student Loan Discharge Program (SLD Program) designed to streamline adversary proceedings under 11 U.S.C. § 523(a)(8) involving student loans held by the United States Education Department (USED).
The program, initially established by Administrative Order FLMB-2026-3 and clarified by Amended Administrative Order FLMB-2026-4, builds upon the November 2022 Department of Justice (DOJ) Guidance for Department Attorneys Regarding Student Loan Bankruptcy Litigation, which was intended to make student loan discharge determinations more consistent, efficient, and accessible.
The amended order clarifies that the procedures apply only to loans held by USED, including eligible federally held FFEL loans, and not to private student loans or other educational loans held by third parties.
Importantly, the program supplements rather than replaces the Middle District of Florida's earlier Student Loan Management Program, established under Administrative Order FLMB-2022-1.
How the Program Works
Participation is voluntary and available to debtors with eligible loans who have pending bankruptcy cases and file adversary proceedings seeking to discharge those loans.
The program establishes a structured process for exchanging information between the debtor, debtor's attorney, USED, the loan servicer, and the Assistant United States Attorney assigned to the proceeding.
Its principal features include:
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Standardized Document Preparation: Debtors use approved document preparation software to assemble the DOJ attestation and supporting financial documentation necessary for an undue hardship determination.
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Centralized Communication: A secure Student Loan Discharge Portal allows the parties to exchange documents, requests, responses, and other communications. Material communications must occur through the portal unless otherwise permitted by the Court.
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Information Sharing: The assigned Assistant United States Attorney provides the debtor with the loan account history received from USED and identifies additional information needed to evaluate the discharge request.
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Good-Faith Participation: All required parties must act in good faith, with debtors required to respond promptly to requests for additional or corrected documentation.
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Consensual Resolution: The program facilitates consideration of discharge under the DOJ Guidance, including agreed stipulations where appropriate, without requiring the government to consent to discharge or altering the substantive burden under § 523(a)(8).
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Presumptively Reasonable Attorney Compensation: The Court authorizes attorneys to seek a presumptively reasonable, or "no-look," fee of up to $2,500, plus out-of-pocket portal costs, as an additional administrative expense, subject to court approval.
The no-look fee covers consultation regarding the likelihood of success, preparation of the complaint and attestation, use of the portal, supplemental documentation, necessary pleadings, and preparation of settlement documents if the parties reach an agreement.
Alternatively, attorneys may seek compensation through a separate fee application supported by contemporaneous time records. Services after the government's final determination require a separate fee arrangement.
The debtor must pay the document preparation software and portal submission fees directly to the respective vendors.
The order also preserves the ordinary adversary proceeding framework. The debtor must file a complaint, properly serve the governmental parties, and obtain an appropriate resolution under the Bankruptcy Rules. Rather than replacing litigation, the program provides a more orderly way to conduct it.
Commentary:
1. Borrowing From the Success of Mortgage Modification Programs
Perhaps the most important aspect of this program is that it recognizes what bankruptcy courts learned years ago through their Mortgage Modification Mediation (MMM) and Loss Mitigation Management (LMM) programs.
A court does not need to dictate a particular outcome to make a substantial difference in whether parties can reach a fair and efficient resolution.
Mortgage modification programs generally do not require a lender to modify a mortgage, reduce an interest rate, waive arrearages, or forgive principal. Instead, they require a structured, transparent process through which the debtor, debtor's attorney, mortgage servicer, and creditor's representatives exchange information and meaningfully evaluate available options.
That procedural reform has made mortgage modification programs valuable in bankruptcy courts across the country, including North Carolina.
The same principle applies to student loan discharge adversary proceedings.
Nothing in the Middle District of Florida's program requires USED to agree that a debtor has established undue hardship. Nor does the program relieve the debtor of the burden imposed by § 523(a)(8), override applicable judicial standards, or compel a bankruptcy judge to approve a discharge.
Instead, it ensures that the parties have a reliable mechanism to obtain the information necessary to make those determinations.
This is particularly important because many student loan adversary proceedings do not turn primarily on disputed legal principles. Rather, they involve evaluating financial circumstances, income prospects, repayment history, health issues, family responsibilities, and the other factors addressed by the DOJ Guidance.
A secure portal that keeps the relevant parties informed can avoid repeated document requests, lost submissions, unnecessary discovery disputes, and delays caused by misunderstandings or incomplete information.
The analogy to mortgage modification is particularly apt because both types of proceedings involve creditors or governmental agencies that may have information not readily accessible to debtors and require meaningful communication between several parties before a resolution is possible.
2. With Reduced Federal Staffing, Efficiency Is More Important Than Ever
The program also comes at a particularly important time for USED and DOJ.
With staffing reductions and increased demands on federal personnel, there is an obvious need to use remaining resources as efficiently as possible.
Student loan discharge cases require coordination between at least two federal agencies, USED and DOJ, as well as the assigned Assistant United States Attorney, the debtor, and debtor's counsel.
Without standardized procedures, even relatively straightforward cases may become unnecessarily time-consuming.
Attorneys may submit incomplete attestations, government lawyers may need to request the same information repeatedly, USED may have difficulty obtaining or verifying account histories, and the parties may spend months exchanging correspondence that could have been handled through a more organized process.
That costs everyone money.
It also consumes the limited time of federal employees who have many other responsibilities.
The Florida program addresses those inefficiencies directly by providing a common platform, standardized documentation, and a transparent record of communications and outstanding requests.
This is not simply a debtor-friendly program. It is also a potentially valuable government cost-saving measure.
For USED and DOJ, reducing unnecessary administrative work should allow attorneys and agency personnel to concentrate their efforts on cases that genuinely present disputed facts or legal questions.
For debtors and their attorneys, a more predictable process reduces uncertainty and expense.
And for bankruptcy courts, consensual resolutions can reduce contested discovery, unnecessary hearings, and trials.
At a time when federal staffing and budgets are under pressure, it makes little sense to continue requiring each student loan adversary proceeding to reinvent the administrative wheel.
3. The Research Is Increasingly Clear: More Student Loan Adversary Proceedings Should Be Filed
The Florida program also directly addresses concerns raised in several recent law review articles previously discussed on North Carolina Bankruptcy Expert.
In Law Review: Jason Iuliano – Bridging the Student Loan Bankruptcy Gap, Professor Iuliano analyzed more than 600 adversary proceedings filed during the first year following adoption of the DOJ Guidance.
His findings were both encouraging and troubling.
Student loan borrowers pursuing discharge under the reformed procedures experienced success rates approaching 87%.
Yet remarkably few eligible bankruptcy debtors filed adversary proceedings in the first place.
Iuliano's central finding was that the DOJ reforms had significantly improved outcomes for borrowers who sought relief, but had done much less to close the gap between borrowers who might qualify for discharge and those who actually pursue it.
The problem is increasingly one of access, attorney participation, and procedural barriers rather than simply the substantive law.
Similarly, in Law Review: Jason Iuliano – Gendered Outcomes in Student Loan Bankruptcy, Iuliano found that the standardized DOJ attestation process had substantially improved outcomes and encouraged resolution without trial.
His research also highlighted how the process of presenting and evaluating evidence matters, with differences in outcomes that cannot be explained simply by debt levels or financial circumstances.
But even with those improvements, the overwhelming majority of bankruptcy debtors with student loans still never bring a dischargeability action.
A more cautionary assessment appears in Law Review: Pang, Bruckner, and Jiménez – The Missing Cases: Student Loan Discharge in Bankruptcy After Reform.
Using a different methodology, Professors Belisa Pang, Matthew Bruckner, and Dalié Jiménez found that only approximately 56% of the cases they examined resulted in full or partial discharge, a materially lower figure than that reported in Iuliano's research or by the government.
These different findings should not be ignored or treated as interchangeable. They suggest a continuing need for more transparent and consistent reporting about the outcomes of student loan adversary proceedings.
Nevertheless, the studies largely agree on the more important systemic problem: Far too few debtors are bringing these cases.
Pang, Bruckner, and Jiménez also found that attorney fees are a substantial barrier, with 63% of surveyed bankruptcy attorneys reporting difficulty finding clients able to afford representation.
Among their recommendations were standardized procedures, more transparent information about outcomes, and alternative attorney compensation structures.
The Middle District of Florida's program responds to all three concerns, although its approach to attorney compensation may not go far enough.
4. The $2,500 No-Look Fee Is a Good Start, But Likely Insufficient
One of the most significant features of the Florida program is its authorization of a presumptively reasonable attorney fee of up to $2,500, potentially payable as an additional administrative expense.
Unfortunately, while this recognizes the need to provide predictable compensation to attorneys bringing Student Loan Adversary Proceedings (SLAPs), $2,500 is likely insufficient to compensate attorneys adequately for the work involved, particularly when payment is made over the course of a Chapter 13 plan.
Even with the DOJ Guidance, a reasonably straightforward SLAP generally requires approximately four to eight hours of experienced attorney time, including reviewing the debtor's student loan history, analyzing the applicability of § 523(a)(8), evaluating the debtor's financial circumstances, advising about the likelihood of success, reviewing the attestation and supporting documents, preparing the complaint, communicating with the government, and obtaining an appropriate settlement or judgment.
Depending on the locality, a reasonable hourly rate for an experienced bankruptcy attorney performing this work would generally be $400 to $500.
Importantly, 11 U.S.C. § 330(a)(3)(E) expressly directs bankruptcy courts, when determining reasonable professional compensation, to consider:
"with respect to a professional person, whether the person is board certified or otherwise has demonstrated skill and experience in the bankruptcy field;"
Congress has therefore specifically recognized that board certification, demonstrated skill, and experience in bankruptcy practice are relevant to determining reasonable professional compensation. Section 330(a)(3)(F) also directs consideration of the customary compensation charged by comparably skilled practitioners outside bankruptcy cases, while § 330(a)(4)(B) authorizes reasonable compensation for representing individual Chapter 13 debtors, considering the benefit and necessity of the services and the other statutory factors.
Those considerations are especially relevant to SLAPs, which require an understanding not merely of bankruptcy law and the undue hardship standard, but also of federal student loan programs, Income Driven Repayment, Public Service Loan Forgiveness, and other available alternatives to discharge.
Indeed, the experience and expertise of an attorney may substantially reduce the time necessary to evaluate and resolve a SLAP. An attorney who can accomplish in four hours what might take a less experienced attorney eight hours should not be penalized through an hourly rate that fails to reflect that experience.
The reasonable hourly rates allowed for SLAPs should reflect the attorney's board certification, demonstrated skill, and particular experience in both consumer bankruptcy and student loan matters.
At $400 to $500 per hour, four to eight hours of attorney time alone represents $1,600 to $4,000.
Additionally, these proceedings commonly require approximately equal amounts of paralegal time to gather and organize records, prepare the attestation and supporting exhibits, coordinate with the client, submit documentation, monitor requests, and assist in completing the adversary proceeding.
At reasonable paralegal rates of $125 to $200 per hour, that represents another $500 to $1,600.
Consequently, the ordinary SLAP may involve professional services valued at approximately:
| Professional Services |
Lower Estimate |
Upper Estimate |
|---|---|---|
| Attorney (4–8 hours at $400–$500/hr) |
$1,600 |
$4,000 |
| Paralegal (4–8 hours at $125–$200/hr) |
$500 |
$1,600 |
| Total |
$2,100 |
$5,600 |
These figures do not include court costs, software expenses, or additional work necessitated by disputes, incomplete records, or complications in obtaining a resolution.
While a $2,500 fee may adequately compensate an attorney for a particularly simple case, it is substantially below the reasonable value of professional services in many ordinary cases.
Indeed, even using midpoint estimates of six attorney hours at $450 per hour and six paralegal hours at $160 per hour, the professional time involved totals $3,660.
That is nearly 50% more than Florida's presumptive fee.
Chapter 13 Payment Makes the Economics Even More Difficult
The problem is compounded when the no-look fee is paid through a debtor's Chapter 13 plan.
Unlike an attorney who collects a retainer at the commencement of representation, an attorney whose fee is paid through the plan may not receive full compensation for several years.
A $2,500 fee paid in installments over a three- to five-year Chapter 13 plan is not economically equivalent to receiving $2,500 when the work is performed.
The attorney must absorb the time value of money, the administrative costs of tracking and collecting payments, and the delay between providing services and receiving compensation.
More importantly, there is the ever-present risk that the Chapter 13 case will be dismissed or converted before the attorney has been paid in full.
If that occurs, the attorney may receive only a fraction of the approved compensation despite having completed substantially all the required work.
This is particularly significant because SLAP services are generally front-loaded. The attorney and paralegal must complete the financial analysis, prepare the adversary proceeding, assemble the attestation, and negotiate with the government early in the process.
The professional services are provided immediately, but compensation may remain contingent on the debtor's ability to maintain plan payments for years afterward.
There is an additional irony here: The same financial hardship that makes a debtor a strong candidate for discharge of student loans may also make that debtor less likely to complete a Chapter 13 plan.
Attorneys who accept delayed payment through the plan are therefore assuming collection risks arising from precisely the circumstances that justify bringing the discharge proceeding.
Certainly, not every approved fee must be paid evenly over the life of a plan. The actual timing and priority of payment will depend upon the confirmed plan, applicable law, trustee disbursement practices, and court orders. But whenever compensation is deferred, its economic value is reduced, and the risk of nonpayment increases.
A More Realistic Approach to Compensation
The better approach would be to establish a no-look fee that more closely reflects the professional services reasonably necessary to prosecute a SLAP, including the specialized skill and experience expressly recognized by § 330(a)(3)(E), while preserving the ability to seek additional compensation in unusually complicated cases.
A presumptive fee in the range of $3,500 to $5,000, depending on local attorney and paralegal rates, would more realistically reflect the costs of preparing and resolving these proceedings.
But perhaps bankruptcy courts should also consider loosening their grip on attorney compensation and allowing the invisible hand of the marketplace to function.
Rather than attempting to establish a one-size-fits-all fee for SLAPs, courts could allow attorneys and their clients greater freedom to negotiate reasonable compensation arrangements tailored to the circumstances of each case, subject, of course, to the disclosure and reasonableness requirements of §§ 329 and 330.
Such agreements could include flat fees, hourly arrangements, or hybrid structures, with clearly defined benchmarks for particular stages of representation, payments tied to completion of agreed services, and partial refunds when matters are resolved more quickly or require less work than anticipated.
For example, an attorney and client might agree on compensation for the initial evaluation and preparation of the DOJ attestation, an additional amount upon filing the adversary proceeding, and further compensation for negotiating a stipulated discharge or handling contested litigation. Alternatively, a flat fee could include specified refunds if the debtor elects not to proceed, the government agrees to discharge without substantial further work, or the representation otherwise concludes before all contemplated services have been performed.
These arrangements would provide clients with greater transparency and predictability while allowing attorneys to compete on price, experience, efficiency, and the scope of services offered.
There is also no reason that an experienced attorney who can handle these matters efficiently should be required to charge the same fee as an attorney who requires substantially more time, or that every debtor should have to purchase the same level of representation regardless of the complexity of the case.
The Bankruptcy Code requires reasonable compensation, not uniform compensation.
Of course, the marketplace for bankruptcy representation is not entirely free. Debtors are financially distressed, often have limited access to counsel, and may be particularly vulnerable to excessive or poorly explained fees. Judicial review and meaningful disclosure remain important protections.
But those protections need not require courts to prescribe fees so rigidly that attorneys cannot develop innovative and mutually beneficial compensation arrangements.
Courts should also consider procedures allowing approved SLAP fees to be paid earlier in the Chapter 13 plan, rather than requiring attorneys to wait years for compensation.
There is a balance to be struck. Payment priority must account for the debtor's ability to maintain plan payments, other administrative expenses, and the interests of creditors.
Nevertheless, providing attorneys with reasonable compensation is essential if bankruptcy courts want to increase the number of debtors able to pursue student loan discharges.
The answer cannot simply be to require specialized attorneys to subsidize representation by accepting fees below their reasonable costs, while also assuming years of collection risk.
The research discussed above demonstrates that the principal problem today may no longer be the inability to obtain a discharge, but the inability to find and afford counsel to bring the proceeding.
An inadequate or overly restrictive fee structure risks perpetuating that problem.
Florida deserves credit for recognizing that SLAPs should have a predictable compensation mechanism. But perhaps the greatest contribution courts could make would be to establish efficient procedures, ensure transparency and meaningful judicial oversight, and then give debtors and their attorneys sufficient flexibility to negotiate reasonable compensation in a functioning marketplace.
After all, the same principle underlying Florida's Student Loan Discharge Program should apply to attorney compensation: The court need not dictate the outcome to facilitate a fair and efficient process.
5. More Bankruptcy Courts Should Adopt Similar Programs
The Middle District of Florida is not alone in recognizing the value of student loan management procedures.
As previously discussed in the commentary on The Missing Cases, the Southern District of Florida, Northern District of Florida, and Eastern District of Pennsylvania have also developed student loan programs, although their procedures and scope differ.
The Middle District of Florida's newer discharge program is particularly useful because it directly integrates the DOJ Guidance into the administration of § 523(a)(8) adversary proceedings.
There is no obvious reason why more bankruptcy courts, including those in the Eastern, Middle, and Western Districts of North Carolina, could not adopt comparable procedures.
And they need not all use the same commercial software or portal.
The essential features are straightforward: standardized documentation, secure and transparent communication, timely exchange of loan histories, reasonable responses to information requests, and predictable and adequate compensation for debtors' attorneys.
That last element is particularly important.
Courts should not assume that streamlining the administrative process eliminates the need for experienced legal analysis and representation. Student loan discharge proceedings remain adversary proceedings, and attorneys retain professional obligations to investigate claims, evaluate facts, advise clients, and ensure that any resolution is legally appropriate.
Greater efficiency should reduce unnecessary work, not devalue the necessary work.
The larger objective should be to make student loan adversary proceedings a routine and accessible part of consumer bankruptcy practice rather than unusual litigation undertaken only by a handful of specialists.
The DOJ Guidance already provides a substantial framework for evaluating discharge requests. Individual courts can make that framework more effective by establishing consistent local procedures for implementing it.
Importantly, this does not mean courts should push the government to consent to inappropriate discharges.
It means that debtors who may qualify for relief should have a realistic opportunity to present their circumstances, that government attorneys should receive the information needed to evaluate those circumstances, and that the parties should be able to identify cases suitable for agreement without unnecessary expense.
6. An Opportunity to Measure Whether Procedural Reform Actually Works
One additional improvement would be for courts implementing these programs to collect and publish aggregate information regarding participation and outcomes.
That could include the number of SLAPs filed, the number participating in the program, the time required for resolution, the proportion resulting in full or partial discharge, the number requiring contested litigation, and the attorney fees ultimately approved and actually paid.
The distinction between approved and collected compensation is particularly relevant for cases in which attorney fees are payable through Chapter 13 plans.
Information regarding dismissals, conversions, and unpaid administrative expenses would help courts evaluate whether their compensation structures are economically sustainable for consumer bankruptcy practitioners.
Such information could also help reconcile the differing outcomes reported by Iuliano and by Pang, Bruckner, and Jiménez.
A successful program should be evaluated not merely by the percentage of participating debtors who obtain discharges, but also by whether it enables more eligible debtors to seek relief in the first place.
Conclusion:
The Middle District of Florida deserves credit for adopting a thoughtful and practical approach to student loan discharge litigation.
Rather than attempting to change the substantive law, the Court has recognized that much of the difficulty in obtaining student loan discharges lies in the procedures used to administer that law.
Like the mortgage modification programs that preceded it, the Student Loan Discharge Program does not guarantee a particular result. It creates a more organized, transparent, and efficient process for debtors, their attorneys, USED, and DOJ to evaluate and potentially resolve disputes.
That is particularly important when federal agencies are operating with fewer personnel and tighter resources.
The recent empirical research on student loan adversary proceedings makes clear that the 2022 DOJ Guidance substantially improved the prospects for debtors who seek discharge, even if researchers disagree about the precise success rate.
What has not improved nearly enough is the number of debtors who actually seek that relief.
Florida's program addresses one side of that problem by making the process more efficient. But courts must also address the economics of representation. A $2,500 no-look fee, particularly when paid over several years through a Chapter 13 plan and subject to the risk of dismissal, may be insufficient to encourage attorneys to take on these cases.
The next step in student loan bankruptcy reform may not require Congress to amend § 523(a)(8), or the Supreme Court to reconsider Brunner. It may simply require more bankruptcy courts to follow Florida's example by establishing sensible procedures, encouraging meaningful communication, and providing realistic compensation for the attorneys necessary to make those procedures work.
And perhaps courts should recognize that while standardized procedures benefit everyone, standardized fees are not always the best solution. The same willingness to facilitate rather than dictate outcomes that underlies Florida's student loan program could also inform judicial oversight of attorney compensation.
More courts should adopt programs like this one—but they should also recognize that meaningful access to student loan discharge requires not merely an efficient process, but an economically sustainable one, with sufficient flexibility for debtors and experienced attorneys to negotiate reasonable fees.
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