Filing Bankruptcy With Student Loans

It’s no secret that student loan debt is one of the biggest problems facing Americans today. The National Center for Education Statistics reports that there’s more than 44 million Americans who have student loans and owe an average of $29,000 each. Unfortunately, bankruptcy doesn’t erase your student loan debt. You can’t just file bankruptcy and have your debt wiped away!

Most people don’t realize that you can’t file for bankruptcy to get rid of your student loan debt.

Most people don’t realize that you can’t file for bankruptcy to get rid of your student loan debt.

You may be shocked to learn that the law does not allow you to discharge student loans in a Chapter 7 or Chapter 13 bankruptcy. This means that even if your income is low enough, or if you are in financial distress because of illness/injury/job loss, and even if there are other reasons why it seems like this would be a good idea—you still won’t be able to do it without some alternate form of relief from the court system.

Most people think that if they file for bankruptcy, their student loans will be erased from their record, and they will be able to start over again.

You can’t get rid of your student loans by filing bankruptcy.

If you file for bankruptcy, the courts treat student loans like any other debt in your life. They will not be erased from your record and they are very unlikely to be discharged, unless certain conditions are met. In fact, when it comes to student loans going through bankruptcy, there are very few circumstances under which this happens.

• If you meet one of the following requirements:
• Your income is so low that paying off your loan would create an undue burden on you (this means your basic needs—such as food and shelter—would be threatened if you were forced to pay off the loan). This is difficult to prove; most people do not qualify for this type of discharge because their income is simply too high or because there aren’t enough other factors indicating undue hardship;
• Your creditor has committed fraud against you or acted illegally when collecting payments; in these cases, many courts will find that it would be “unconscionable” for the court system itself not to forgive some or all of a borrower’s debt (but only if there was intentional wrongdoing); or
• The contract governing repayment was signed too long ago before new laws limiting interest rates went into effect (in most cases today).

Unfortunately, that’s not the case.

Unfortunately, that’s not the case. Student loans are not dischargeable in bankruptcy. This means that even if you file for bankruptcy and your debts are discharged, student loans remain on your credit report and get reported to the National Student Loan Data System (NSLDS). In other words, filing bankruptcy won’t stop those student loan payments from coming due each month.

It’s not uncommon for people to think that their student loans will just disappear once they file for bankruptcy.

It’s not uncommon for people to think that their student loans will just disappear once they file for bankruptcy. This is not the case! As you prepare to file, it’s important to know that bankruptcy does not get rid of all your debts, only some of them. Bankruptcy does get rid of certain kinds of debts, such as credit card debt, medical bills and personal loans. However, student loans are considered by the courts as an exception—they’re non-dischargeable in bankruptcy proceedings. What this means is that even if you file for Chapter 7 or Chapter 13 bankruptcy with student loan debt, it will still be there when the process is over unless a judge decides otherwise.

Banks usually make it clear that you can’t wipe out your student loans with a bankruptcy filing, so the fact that the rules are different when it comes to private loans is often surprising.

You may be surprised to learn that there is a way to get rid of private student loans that don’t meet the requirements for discharge. If a borrower has a cosigner on their loan, they can file for bankruptcy without consequence to the cosigner. Those who have federal student loans cannot do so, however.

The fact that this information isn’t widely known is probably due to banking institutions making it clear that you cannot wipe out your student loans with a bankruptcy filing. Sometimes banks are even willing to verify this directly with their customers just in case it was not already obvious from their marketing materials and statements made by bank representatives when talking about the topic of bankruptcy.

Not being able to pay off your private student loans through a bankruptcy filing is not the same as not being able to get rid of them at all.

• You can still declare bankruptcy and get rid of your debt.
• You can still declare bankruptcy and not pay back your debt.
• You can still declare bankruptcy and pay back your debt.
• You can still declare bankruptcy and pay back your debt and not have to pay interest on your debt

There are still ways you can try to get out of paying off your private student loans.

You might be able to get out of paying off your private student loans in the following ways:

• Consolidate your loans. If you have a number of different private student loan lenders, it’s often possible to consolidate them into one loan with a lower interest rate and better terms. This is because when you combine multiple debts into one, the lender will take into consideration all your income and expenses when deciding what they can afford to lend you—even if they’d previously turned down other people’s requests for larger amounts. However, this strategy won’t work if you just want to pay off part of a particular loan; consolidation only works if all your debts are from one lender (and you’re willing to put up with higher interest rates).
• Look for better deals. Many banks give borrowers discounts on their credit cards in exchange for good customer service ratings or referrals from friends who are also customers—so ask around! Similarly, some banks offer special promotions that make it easier for certain groups (such as recent graduates) who want access to credit but don’t have much experience using credit cards yet; check online before applying so that if there’s one available where you live now then apply immediately rather than waiting until later when more competition could mean less favorable terms than those being offered now.”

You can’t erase your debt by filing bankruptcy, but there are other ways of getting out of paying it back.

A bankruptcy court will determine whether you can discharge your student loans. You’re only eligible to have your student loan debt discharged if you can prove that repaying it would cause an undue hardship on you or your dependents.

If the court agrees to discharge your student loans, they won’t be canceled altogether. Instead, they will become “dischargeable,” which means you no longer need to make payments on them and they won’t appear on your credit report as a liability anymore. However, the lender may still pursue collection efforts against you for any unpaid balances after bankruptcy ends (which could include garnishing wages).

If you have student loans that you can’t afford, bankruptcy filing might not be the best option for you. You can still try to get rid of your private student loan debt through other means like consolidation or repayment plans.