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Student Loans and Bankruptcy: Can you discharge your student loans by filing for bankruptcy?

Posted by attorney James Brown

Bankruptcy can help you with many different types of debt and creditors, but can bankruptcy discharge your student loans? In most cases, student loans are not forgiven during any type of bankruptcy process, including Chapter 7 bankruptcy and Chapter 13 bankruptcy. Although in the past student loans would be forgiven during bankruptcy as long as the filer had paid their student loans for seven years, that law was changed several decades years ago. Currently, the only way to discharge your student loans during the bankruptcy process is to prove undue hardship - that is, that repaying your student loans causes you and your dependents to live below the minimal standard of living. In most cases, undue hardship can only be proven if the person filing for bankruptcy is physically unable to work and provide for their family - and will not be able to provide for their family in the future through earning a wage. In a limited number of cases, a bankruptcy court or bankruptcy judge could discharge part of your student loan debt if you can prove that paying the entire sum would cause undue hardship for you and your family. Although your student loans will probably not go away when you file for bankruptcy, a Chapter 13 reorganization bankruptcy can help you to possibly lower your payments or to consolidate your student loans with your other debts. With a Chapter 13 bankruptcy, you can include your student loans in your repayment plan and successfully lower the balance owed over the course of your repayment. However, the balance at the end of your repayment plan will still need to be paid. In general, if the majority of your debt consists of student loans, bankruptcy may not be the right choice for you. However, if student loan debt is part of your larger financial difficulties, declaring bankruptcy may help you reestablish your financial stability and start fresh.

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