I would say what is sad is perpetuating the mythology that all "student loans" are nondischargeable. First of all, the Bankruptcy Code does not define "student loan." Section 523(a)(8) does render nondischargeable loans that are "made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution." Loans that do not fit any of those categories are not nondischargeable unless they are "a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code." Loans made by commercial financial institutions outside the FAFSA system very commonly did not meet the 221 requirements. The fact that they were made to a person who was a student does not make them a "qualified education loan." This argument may sound exotic, but it is based on the strict construction of the Bankruptcy Code. The fact that we don't have caselaw supporting this result is entirely explained by the widespread ignorance of bankruptcy practitioners who continue to parrot the "rule" that "student loans are not dischargeable" except for undue hardship. ( And for developing law on that subject read the Judge Pappas concurring opinion in Roth v. ECMC published by the 9th Cir. BAP yesterday questioning the ongoing viability of the Brunner test for hardship.)
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Read your loan contract. If it states that these loans are STUDENT loans which are federally insured, then they cannot be discharged in bankruptcy.
Be sure to designate "best answer." If you live in Oregon, you may call me for more detailed advice, 503-650-9662. Please be aware that each answer on this website is based upon the facts, or lack thereof, provided in the question. To be sure you get complete and comprehensive answers, based upon the totality of your situation, contact a local attorney who specializes in the area of law that involves your legal problem. Diane L. Gruber has been practicing law in Oregon for 26 years, specializing in family law, bankruptcy, estate planning and probate. Note: Diane L. Gruber does not represent you until a written fee agreement has been signed by you and Diane L. Gruber, and the fee listed in the agreement has been paid.Ask a similar question
Sadly, no. Since 2006, private student loans are treated the same as federally guaranteed loans, at least with respect to bankruptcy. You cannot discharge a student loan unless you file an adversary complaint and prove "undue hardship" which is nearly impossible to do. If you are disabled and/or over 60, you may have a shot at a hardship discharge.
You may be able to settle these debts if you have any funds available to do that. You may be able to file a chapter 13 if you can pay part of the debt on a monthly basis. There's not much else you can do - our student loan financing system is extremely biased in favor of lenders and needs to be changed.
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Presently, all student loans are treated the same so long as they are true student loans. Just because you obtained a loan while a student does not automatically make the loan a student loan and therefore non-dischargeable. If you have any doubt whether your loan is a "student loan" that would be excepted from discharge you should consult with BK counsel prior to filing your petition. Additionally, legislation has again been introduced to make private loans dischargeable. If you can wait, it might behoove you to see if anything is likely to come from newly proposed legislation.
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