Guide to Student Loan Bankruptcy

If you have unable to pay off your student loans, bankruptcy is an option but should only be examined after every other option has failed. Since the passing of a law in 2005, student loan debt is nearly impossible to discharge student loan debt by filing bankruptcy. Discharging is a court injunction that prevents lenders from taking action to collect on a debt. Essentially, it stops the borrower from having to pay back their debt. There are certain ways that student debt can be discharged, it is better to seek other plans before trying to follow this route.

Filing for bankruptcy instantly makes most student loans in default. You will be responsible for the entire balance the day you file. Before filing for bankruptcy see if you can get a more favorable payment plan worked out with your lender. Especially if you are not behind on your loan, there might be many options available that will prevent bankruptcy. Call up your lender or loan servicer to see your choices before taking any drastic action.

In order to get bankruptcy discharge of your student loans the borrower needs to be able to prove extreme hardship. Examples include a debilitating illness or severe disability that will prevent the borrower from paying back loans in the foreseeable future. Loans may also be discharged if it can be proved that the borrower and his or her dependents will be unable to live even a minimal lifestyle if payments on the loan are made. Most importantly, there needs to be evidence that the borrower did in fact try to pay back their loans and couldn’t, as opposed to purposefully avoided paying loans.

There are other circumstances that may aid in getting a discharge of debt. If the borrower did not benefit from their education there is a much higher chance of getting a discharge. Showing an attempt to reach a payment plan with the lender is a very important key. Bankruptcy judges know that lenders do not always play fair, and explaining that you did attempt to communicate the situation before going to bankruptcy court can be a tremendous tool.

Filing for bankruptcy is a serious action. It will destroy your credit and can stay on a credit report for up to ten years. Filing is also difficult, time consuming, and there is no guarantee that it will help your student debt situation. As student debt is one of the hardest types of loans to get discharged, it is in your best interest to get a bankruptcy lawyer. Your state bar association will have a list of lawyers practicing bankruptcy in your area. Try to find one that has been certified by the American Board of Certification. This indicates that the lawyer has proven expertise in the area of bankruptcy. Do not just pick the first lawyer you come across to get it over with, the job your lawyer does means the difference between winning your case and losing it. Set up consultations with multiple lawyers and find one that you are comfortable with and who you believe will get the job done correctly.

About the Author: This article is written by Jon Haver from He has started the website to help student get out of debt faster after they graduate. With the average student debt load at $28k upon graduation his site gives these students an unbiased resource to learn about the different options to pay off student loans faster.

Vijayraj Reddy
Vijayraj Reddy is founder & editor-in-chief of, a financial blog which helps people to earn money, invest money and save money. You can find him on Facebook & Twitter or send him email at [email protected]

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One Response to “Guide to Student Loan Bankruptcy”

  1. Josh Malone says:

    I am sure that in extreme instances that filing bankruptcy to discharge student loans might be possible, I would think that is a very low probability. I am curious that the student did not benefit from their education statement. Do you mean that they did not finish? or That they are not using their job directly in the position that they currently hold? The reason I ask is many people do not do the second including myself, but does it benefit the student to have a non-related associates or even bachelors degree period anymore?

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