Can student loan debt be discharged through bankruptcy?

A vast portion of the population is struggling to find a way to cope with student loan payments. Some of these individuals feel cheated, since they felt that higher education was necessary to achieve a better financial outlook, only to be saddled with burdensome debt for years to come. This is especially true for those who find themselves on hard economic times, whether due to an unexpected medical condition, a lost job or wages that don't live up to expectations.

This leads many to consider bankruptcy. However, those considering personal bankruptcy should be aware that it is extremely difficult to discharge student loan debt through the bankruptcy process. In order to succeed, an individual must show that the student loan repayment plan poses an undue hardship. This can be challenging, especially given the various income-based repayment plans available to borrowers. However, successfully discharging this debt is not impossible.

While there is no clear definition of "undue hardship," there are certain situations that may help show that such hardship exists. For example, if continuous payment of the student loan debt would disallow an individual from maintaining a minimal standard of living, then undue hardship may be found if the petitioner has made a good faith effort to repay the loan. Also of significance is the period of time that the hardship is expected to last under the circumstances.

When seeking to discharge student loan debt, the matter becomes adversarial in that creditors will likely challenge the bankruptcy petition. Evidence must be presented to persuade a court to rule in one's favor. This requires skilled legal work. Before proceeding down this route, though, individuals who find themselves in this situation should consider sitting down with a bankruptcy attorney to determine if discharging other debt would be easier and more beneficial.

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