I have been in repayment for two years. The monthly payment amount is based on my pay throughout the year.
You generally will not be able to discharge student loan debt in a bankruptcy case. The test for discharging this type of debt is basically you must be destitute, and living on the street before a bankruptcy court will allow you to discharge student loan obligations. You can file a Chapter 13 case, and pay the student loan in installments under a five year plan, but if your balance is very large, you will have a debt obligation that would survive your Chapter 13 discharge. Go see a bankruptcy attorney, and see if a Chapter 13 would make sense given your current repayment situation. Your current situation might be the best deal you can get, or you could look at special programs that allow you to discharge student loan debt in exchange for public service employment.
Student loans cannot be discharged except in extreme circumstances."Undue hardship" must be proved, but the courts are very strict when applying this standard. I do not know whether you have a private or federal student loan, but it sounds like you have a federal loan and are repaying under a program that permits you to pay based on your income. These programs can greatly minimize what you have to pay. Some of these programs are for 25 years and then the balance of the debt is forgiven(this forgiveness would be treated as taxable income). But meanwhile, you might only have to make little or no payments as a result of these programs.
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Besides what was already said, by putting the amount of the student loan into a Chapter 13 plan, no interest is allowed to continue, so the payment will be against the principle only!
It sounds like you have a federally guaranteed student loan and are on one of the income based repayment programs. You won't be able to declare bankruptcy on that loan absent a serious hardship. It is very difficult to discharge federal student loans because under these repayment programs that are based on income, it is very difficult to show that that the payment is causing an undue financial burden (especially since it is possible for the payment to be $0 per month in some circumstances).
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