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Are private student loans dischargable under a chapter 13?

Houston, TX |

The orginal lender of the private loan was listed as part of my bankruptcy and was one of the creditor that was sent a discharge letter once I completed the bankruptcy. I know have a collection agency attempting to collect the amount plus penalty and interest.

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Attorney answers 4


Assuming your bankruptcy was filed after 2005, private student loans are not automatically discharged in bankruptcy. All of your creditors get the discharge letter, but that does not mean necessarily that the debt is discharged. For student loans, in order to get a discharge, the repayment of the loans must cause you "undue hardship". In order to prove this hardship, you have to file a lawsuit within the bankruptcy, called an adversary proceeding, against the student loan creditor seeking to declare the student loans discharged. Then, the court hears your evidence of undue hardship and decides whether or not to grant the discharge in whole or in part. Undue hardship is something of a fuzzy standard; some courts require that repayment leave you at or near the poverty level, while others are more liberal. The court also looks at your future earning prospects, as well as efforts you have made in the past to pay the loans and other relief that could be available, such as an extended repayment plan.

I am licensed only in Texas. Offering information of a general nature in response to a question is not intended to be legal advice in your state.


Since 2005 there is no distinction between the dischargeability in bankruptcy of private vs government-backed student loans.

To discharge a student loan in bankruptcy, most courts use the test set forth in what is called the "Brunner" case. It involves 3 steps. You must prove (1) if forced to repay the student loans, you would be unable to maintain even a minimum standard of living; (2) this situation will continue for all or most of the student loan repayment period; and (3) you have made good faith efforts to repay the student loans.

Many people can prove elements 1 and 3, but proving that your current "down on your luck" situation is going to continue for a long long time can be tough. Also, some courts add a requirement that you show a "certainty of hopelessness" and prove that there is really no possible way that you could ever repay the loans.

Not only that, but student loan creditors are aggressively arguing in bankruptcy courts that there are other repayment alternatives available that a debtor should try before seeking to discharge the debt in bankruptcy, such as "income based repayment" or IBR, which is at least available on federal loans.

On private loans, we have been able to negotiate settlements with some of them to reduce the balance due. If it does not appear that you can discharge the loans in bankruptcy, you may wish to try to resolve the loans through a settlement of some kind.

We are a debt relief agency and we help people file for relief under the bankruptcy laws.


You need to talk to a good Chapter 13 lawyer. Under Espinosa, the US Supreme Court upheld the discharge of student loan debt under some strange circumstances. Your exact senario might fit the bill so you may be in luck.


No. Student loans are not dischargeable. There is a move afoot to change that as far as private student loans but it does not seem to have much support. There is a hardship exception to the non-discharge rule but the requirements are very hard to meet.