You may have heard that it is impossible to get your student loans discharged if you file for bankruptcy. While it is incredibly difficult to get your student loan debt discharged, it is not impossible. There are resources that you can use that will help you if you want to get your debts discharged.
You could easily discharge your student loan debt in bankruptcy prior to 1976. However, the rules changed as the amount of student loan debt grew. Congress first made a change in how long you would have to pay before getting the student loan debt discharged. You had to pay your student loans for five years before you get the debts discharged. Congress then extended the time to seven years.
In 1998, congress stated that they would only discharge your student loan debts in bankruptcy if paying them would create a financial hardship for you. Today, if you want to get your student loan debts discharged in bankruptcy, then you will need to meet the following criteria.
1.) You will not be able to support yourself if you pay off your student loans.
2.) Your financial hardship is not likely to improve.
3.) You have tried to pay your student loans.
It is hard for people to meet all three criteria. There are also student loan forgiveness programs and income-based repayment plans available. Many low-income people qualify for $0 payments per month.
However, if you are interested in discharging your student loans in bankruptcy, then you will need to find an attorney. After that, you will need to file an adversary proceeding. This will allow you to state what your undue hardship is. The final step is to file for bankruptcy.
The judge will determine whether your student loans can be discharged. They may discharge all of them or part of them. However, the judge may decide not to discharge your student loan debt at all.
A judge will likely discharge the student loan debt if a person has extenuating circumstances that prevent them from earning a high income. For example, a person is totally disabled and cannot work.