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If I File for Bankruptcy Will My Student Loans Get Discharged?

For those who have to repay a student loan and are considering filing for bankruptcy, the question on their mind would be: does filing for bankruptcy discharge my student load? Unfortunately, student loans are usually not discharged in the case of bankruptcy.  According to Chapter 7 Bankruptcy law the only time a student loan might be discharged is if it would cause the debtor “undue hardships”.  The same basic rule also applies to Chapter 13 Bankruptcy cases.  

Discharging student loans became popular during the 1970s, when students would file for bankruptcy soon after they finished their pricey education.  They would do so before they started earning so that they could get the loan out of the way.  However, the requirements for discharging student loans were changed in 1998.

According to these new changes, your student loan will only be discharged if the bankruptcy court is convinced that paying back the loan would bring about undue hardships for you or the people who are dependent on you.  Keeping this in mind, the Federal Student Aid Ombudsman (FSAO) stated that there were three criterions that would be used to determine whether a person is eligible to have their student loan discharged or not:

  1. Will repaying your student loans prevent you from maintaining a minimal standard of living?
  2. Will it be difficult for you to maintain your minimal standard of living over the repayment period?
  3. Did you make an effort to repay the loan before filing bankruptcy. Have you been repaying your loan for at least 5 years?

Even if you are unable to fully discharge your student loan debt by filing bankruptcy, there are many other options for dealing with student loans including deferrments and cancellations.

Just because it may be difficult to discharge your student loan debt, you should still discuss your case with a bankrupty lawyer. Bankruptcy attorneys know the law and can help you get the most benefit out of filing for bankruptcy. Contact a local bankruptcy attorney today by completing the Free Bankruptcy Case evaluation form below. A bankruptcy attorney will call you and answer your questions about filing bankruptcy. It's 100% free and there is no obligation. Don't wait -- find out today if filing bankruptcy can help improve your financial situation.

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