Vance P. Truman, Attorney at Law
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Can student loans ever be discharged in bankruptcy?

What's the purpose of filing bankruptcy when your student loans are crushing you as hard as your credit card debt? After all, it's not like student loans can be discharged in bankruptcy, right?

Well, that's not exactly true.

True, it can be difficult to discharge your student loans -- but it isn't totally impossible. You just have to be able to show the bankruptcy trustee that forcing you to repay the loans would "impose an undue hardship on you and your dependents."

The reason this is complicated is that there's no clear standard that the court uses to make that determination. Instead, the court will look at the totality of your circumstances when making the decision. Some of the questions the court will ask include:

  • Can you maintain a minimal standard of living and still repay the loan?
  • Have you made efforts to repay the loan in good faith prior to your bankruptcy?
  • Would the hardship caused to you by repayment continue for an extended period?

For example, imagine that you have $60,000 in student loans from before your marriage. You were making payments regularly on the loans, even though it was often a struggle on your salary as a teacher. Unfortunately, your child was recently diagnosed with autism, and you can't afford the therapy he needs as long as you are repaying the loans. You could arguably present a reasonable case to the court that the loans are an undue hardship on both you and your dependents due to the circumstances.

If your student loans are a major source of your financial burden and you have unusual circumstances that you believe warrant consideration, talk to an experienced bankruptcy attorney today.

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