Can I get rid of student loans with bankruptcy?

The general rule is No, Private and Federally backed Student Loans are Non-Dischargeable in Bankruptcy unless you show all three of these elements below.

However, even if you don’t meet these requirements, there are still ways to help relieve your student loan debt through a chapter 13 bankruptcy.

1. You are unable to maintain a standard of living. One thing you have to show is that if you were forced to repay your student loan debt, you wouldn’t even be able to maintain a minimal standard of living (pay rent/mortgage, pay utilities, buy groceries, etc.).


2. You have experienced prolonged hardship. Next, you have to show that your ability to repay the student loans won’t change or improve in the coming year (you won’t have an increase in income or decrease in other expenses; you have a permanent or chronic medical condition).


3. You have made “good faith” efforts to pay.  Lastly, the Court wants to see that you have actually tried and failed to pay back the loans.  So, for example, let’s say you have made tried to make minimum payments on the loans or you’ve even tried one of the federal government’s repayment plans – those efforts would be on your side in your argument that the debt should be discharged.

Don’t be fooled.  Discharging student loan debt in bankruptcy is not automatic.  If you file a bankruptcy, your attorney will then have to file a “sub-lawsuit” or adversary proceeding within your bankruptcy and directly sue the student loan company and state that you have met all of the above requirements.  Then, most times, the Judge will decide whether you have or not and what relief he or she wants to grant you.

The good news is that it appears that more and more Judges and more and more student loan companies (including the federal government) are becoming sympathetic to those with lots of student loan debt.  It’s no wonder things might finally start to change since student loan debt actually makes up for about $16.7 trillion of the total debt of Americans (Forbes).

Contact the Law Offices of Keith D. Collier now for your free in-office or phone consultation and let us tell you whether bankruptcy might be a good option for you.