Will Bankruptcy Remove Your Student Loans

Q: Will bankruptcy remove your student loans if you can prove that you would have no way of paying back the student loans, even after the rest of your debt was cleared by bankruptcy?

A: For most borrowers, the only way to remove student loan debt is going to be to pay it off. Having student loans removed or discharge through bankruptcy is extremely rare, and extremely difficult. In order to successfully have student loans discharged through bankruptcy, the borrower must be able to demonstrate an extreme hardship, which prevents them from paying the student loans back. An “extreme hardship” would not be classified as being unemployed, or having a job that does not compensate well. An extreme hardship would be more along the lines of something such as the individual is disabled so severely that they can no longer work.

It is important to remember that each bankruptcy case is subject to individual terms. Not all student loans are created or treated equal, so individuals will need to examine the rules that apply specifically to their student loan debt. Federal student loan debt, private student loan debt, and gap student loan debt (loans acquired from a bank) are all treated differently when bankruptcy is concerned.

If an individual’s student loan debt is not cleared within the terms of their bankruptcy, this doesn’t mean that they are out of options for help with student loan debt and/or repayment. Individuals can check into student loan forbearance, student loan deferment, and/or specialized “income contingency” plans (offered by some student loans). For individuals who believe they may have a case for an extreme hardship, that would discharge their student loans through bankruptcy, it is best to seek the help of a qualified bankruptcy attorney.