Does Bankruptcy Eliminate Student Loans?

Student loans can be a significant portion of your personal debt, particularly if you attended a private school or borrowed money to earn a graduate degree.  Prior to 2005, it was possible, although difficult, to get student loans discharged in bankruptcy.  In 2005, bankruptcy laws were amended and the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was signed into law.  The 2005 bankruptcy laws make it clear that student loans are not dischargeable in bankruptcy.  That does not mean, however, that debtors are without options to manage their student loan debt or that they should not file for bankruptcy.

What Else Can I Do to Manage My Student Loan Debt?

Many people with student loans need help managing their student loan debt, whether or not they file for bankruptcy.  While student loans are not dischargeable in bankruptcy, debtors do have some options for student loan management including:

• Consolodate Student Loans: you may be able to consolodate student loans into one loan with smaller monthly payments;
• Take a Job in Public Service: you might not have to repay certain loans if you take certain public service jobs such as becoming a firefighter, teacher, or nurse;
• Seek a Deferment: you may be able to seek a temporary deferment on payments with no penalty if you are unemployed; or
• Qualify for Student Loan Cancellation:  certain circumstances such as a school closing, death and disability may cause your student loans to be cancelled or forgiven.

Should I Still File for Bankruptcy?

That depends on your overall financial situation and level of debt.  Some debtors find that a Chapter 13 repayment plan that creates lower monthly payments on other types of debts leaves them more money to pay their student loans each month.  At the completion of a Chapter 13 repayment plan, other debts may be discharged which will lower your debt burden.  Chapter 7 bankruptcy filers may find similar relief.

How Can a Bankruptcy Attorney Help Me with My Student Loan Debt?

A bankruptcy attorney can advise student loan borrowers about all of their student loan repayment options and about whether they should file for bankruptcy.  If you are a student loan provider, your lawyer will advise you on how to get student loans paid.  In both cases, your lawyer will ensure that your rights are protected.