What Is Bankruptcy?

Bankruptcy allows consumers to wipe out debts for a financial fresh start. There are two types of personal bankruptcy. Chapter 7 allows debtors to discharge debts completely. Chapter 13 allows debtors with regular income to repay some portion of the debt through a court-approved plan.

Can I Discharge My Student Loans In Bankruptcy?

In most cases, student loans cannot be discharged in bankruptcy. It may be possible, however, to discharge your student loans if you can demonstrate undue hardship.

What Is Undue Hardship?

You must meet three criteria to qualify for an undue hardship discharge:

  • Minimal Standard of Living: If you are forced to repay the student loan, you will be unable to cover your basic necessities.
  • Additional Circumstances: The circumstances causing your hardship are likely to persist for a significant portion of the repayment period.
  • Good Faith: You made a good faith attempt to repay the loans.

How Do I Get an Undue Hardship Discharge?

Student loan debt is not automatically discharged in the same way credit card debt is. If you want to get your student loans discharged, you will need to file a lawsuit against your student loan holder in an adversary proceeding as part of the bankruptcy process and prove your hardship to the court.

How Do I Prove Undue Hardship?

The burden of proof is on you to prove that paying of your student loans will cause you undue hardship. You will need to provide financial records and other evidence such as tax returns, bank statements, utility bills, medical records and letters from doctors, documentary evidence of job search efforts, etc.

Can I Discharge Both Federal and Private Student Loans?

Yes, both federal and private student loans are eligible for discharge. Private student loans may be exempt from the undue hardship requirement. Some private student loans may not be qualified education loans and therefore dischargeable just like any other types of debts. Your private loan may not be a qualified loan if you borrowed more than the school’s cost of attendance or you attended an illegible school. The burden of proof is on the lender to demonstrate that your private loans are qualified loans before you must show undue hardship.

Should I File For Bankruptcy To Discharge My Student Loans?

Eliminating your student loans through bankruptcy is possible. Contact us to determine whether bankruptcy is the right solution for you.