In recent years, student loan debt has surpassed credit card debt and auto loan debt to become the second-highest financial burden on Americans (after mortgage debt), and for those who seek bankruptcy for relief from a difficult financial situation, it certainly seems discouraging on the surface when they learn that their student debt can’t be discharged.
Having student loan debt discharged in bankruptcy is extremely rare and not a practical consideration, but there are some limited circumstances in which it is possible. A bankruptcy court may find a borrower’s student debt dischargeable if continuing to pay it would cause “undue hardship” for the borrower and prevent him/her from maintaining a “minimum standard of living,” and the court must also determine that the borrower’s overwhelming financial situation would continue into the future.
For some borrowers, private student loan debt may be dischargeable if the borrower’s school did not participate in federal loan programs; this is because the bankruptcy code defines education loans as “those taken to attend a school that participates in federal student aid programs.”
If you’re struggling financially due to student loans, contact an experienced bankruptcy attorney for a free consultation.