Bankruptcy and Student Loans

The most frequent answer to ” Can You File Bankruptcy on Student Loans through bankruptcy is, unfortunately, no. With that being said, in very specific circumstances it is possible with bankruptcy and student loans. When an individual files for either Chapter 7 or Chapter 13 bankruptcy and wishes to have their student loans discharged, that individual would have to show that the repayment of the student loans would impose an “undue hardship” on the individual and his or her dependents.

The decision as to whether or not the loans constitute an undue hardship is made at an adversarial proceeding in bankruptcy court and the individual’s creditors may be present to challenge the request.

At the adversarial proceeding, the individual would have to show all three (3) of the following:

1. If an individual is forced to repay the loan, he or she would not be able to maintain a minimal standard of living;
2. There must be evidence that this hardship will continue for a significant portion of the loan repayment period; and
3. The individual made good-faith efforts to repay the loan before filing bankruptcy, which usually means the individual has been in repayment for a minimum of five years.

Whether or not an individual’s student loans can be discharged can only be determined on a case by case basis. Although difficult, if an individual can show the above three (3) requirements apply to their situation, discharging student loans is possible.

Student loan relief in a Chapter 13 bankruptcy:

Beginning in July 2024 there is some relief in bankruptcy and student loans in a Chapter 13 bankruptcy.  When you file a chapter 13 bankruptcy and make your plan payments the interest is stayed on your student loans while you are in the plan.  Additionally the payments that you make during the plan count toward your months of payments from repayment plans through the student loan programs offered through the federal government.  You could come out of the completion of your chapter 13 bankruptcy without additional interest, months counted toward number of payment requirements and with the potential to continue on or qualify for an income based repayment plan through the federal student loan repayment programs.

Bankruptcy and Student Loan Help in Mentor, Ohio

Attorney Moseman understands Bankruptcy and student loans laws, and she can help you find the best course of action for your situation. If there is a way to lighten your load, she will figure it out. Contact us today and let us provide help with bankruptcy issues and your student loan debt relief in Mentor, OH, and surrounding areas.