Can You File Bankruptcy For Student Loan Debt?

Yes. It is possible to eliminate your legal obligation on student loans through bankruptcy. A consultation with an attorney can help you determine your eligibility for an undue hardship discharge of your student loans.

Student Loans are not dischargeable in bankruptcy absent an Undue Hardship pursuant to 11 U.S.C. 523(a)(8). This requires additional steps that include filing a lawsuit during your bankruptcy case where to court determines whether an undue hardship exists. I say that it is possible and I have discharged two student loans in bankruptcy, so I know it can be done, but it's not easy, nor cheap.

An undue hardship includes a present financial hardship that often leads to the bankruptcy case itself. It also requires some factors outside of your control that will cause that undue hardship to continue throughout the student loan repayment period; usually at least 25 years. Lastly, it requires that you make a good faith effort to repay your loans by increasing income, cutting expenses, and otherwise cooperating with your lender for repayment.

If you have federal student loans, good faith might look like a forebearance, deferrment, or income sensitive repayment programs. For private student loans only deferrment or forebearance is available on a limited basis. If, after you have done everything within your control to make good on your student loans and still cannot afford them, and are likely to never be able to repay them, then a bankruptcy discharge may be right for you.

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