If there is an extreme hardship, student loans may be discharged in a bankruptcy. However, it is extremely difficult to meet this hardship threshold and in only those rare and extreme circumstances are student loans discharged in bankruptcy. To assess whether there is a hardship, the court would look into one’s future ability to work and earn income. Age is a major factor in this analysis, as is ability to work (not ability to find work).
In a Chapter 13, you can either choose to pay student loans directly, outside of the plan, or the student loan can be paid within the plan. If paid within the plan it is typically paid at the percentage at which your other unsecured debt is being paid, so interest and principal will further accrue. If you have the option to pay student loans directly in your jurisdiction, then this is often the best way to handle it.
As far as the lawsuit by the creditor, you can call the Clerk's office of the Court where you were sued. They should be able to direct you about what the proper legal form is, or you can use a sample answer as a template. By answering the lawsuit towards the end of the 30-day period you are giving yourself more time to file a bankruptcy if that is the route that you choose.
You should consult a local attorney about both of these issues.
Typically, student loans cannot be discharged in a chapter 13 bankruptcy. While bankruptcy is an option for your credit card debt, I would recommend consulting a debt settlement attorney before deciding to file for bankruptcy. A debt settlement attorney will negotiate for large reductions in your student loan and credit card debts (principal & interest) allowing you to settle both debts permanently for a fraction of the balance. It does not matter if you are facing collection or a lawsuit. In fact, the debt settlement attorney can represent you in the credit card lawsuit while negotiating down your debts.
For more information and a comparison between bankruptcy and debt settlement, see here: http://www.debtsettlement-ca.com/debt-settlement-vs-bankruptcy/
If you choose not to hire an attorney, the proper legal form for an answer can be found on the California Courts website. Also, make sure to answer before 30 days or else a default judgment will be entered against you.
I highly recommend that you get a bankruptcy attorney. Most of us give free consultations in a private setting where attorney-client privileged information can be divulged. Go see one!
The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here. Please visit my web site: www.avanesianlaw.com for more information about my services.
You must include the student loans in any bankruptcy you file, but it is unlikely you will be able to eliminate these loans in a bankruptcy. In some instances, it may be a good idea to arrange to pay these debts through your Chapter 13 plan so you can challenge your interest rate and any collection fees. Hope this perspective helps!