You may have heard that student loan debt cannot be eliminated in a Chapter 7 bankruptcy. This is normally true. Student loans are one of the types of debt that are not usually dischargeable in most bankruptcy cases, along with child support, alimony, property settlement obligations in divorce, debts incurred through fraud and most taxes.
Sometimes Dischargeable When There Is Undue Hardship
Bankruptcy courts do recognize that some debtors truly cannot repay students loans without undue hardship. This might be the case when a bankruptcy is the result of a serious injury and the debtor has become disabled, for example. A catastrophic injury victim is a good example of a debtor who might succeed at getting student loans discharged in a Chapter 7 bankruptcy.
It is very difficult for most able-bodied debtors to demonstrate undue hardship and a true need to eliminate student loans. If undue hardship can be well documented, a debtor can file a separate motion with the bankruptcy court petitioning to have student loans discharged.
Debt Consolidation, Reorganization and Repayment in Chapter 13 Bankruptcy
A debtor filing a Chapter 13 bankruptcy has more options. Past due student loan payments can be consolidated with other debts and included in the repayment plan that makes up a Chapter 13 bankruptcy. In this case, the debtor would repay the unpaid student loan arrearage over a three- to five-year period along with other reorganized debt.
Even if your student loans cannot be discharged through bankruptcy, keep in mind that many struggling debtors have found ways to cope with student loans while rebuilding their credit after bankruptcy. You may be able to negotiate with the lender to reduce monthly payments and repay your student loans over a longer period of time, for example.
A knowledgeable bankruptcy lawyer can tell you more about ways that debtors have dealt with students loans. P.R. Smith Law Group P.A., with offices in Tampa, Lakeland, New Port Richey and Brandon, advises potential clients about this and other troublesome debts.
Can You Eliminate Student Loans When You File Bankruptcy? Talk to an Attorney. Ask For a Free Initial Consultation at P.R. Smith Law Group, P.A.
For more information on student loans and bankruptcy or to speak with an attorney about your rights, contact the P.R. Smith Law Group to schedule a free initial consultation. Call one of our Florida offices toll free at 888-682-5251 to make an appointment.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
