Typically student loans are considered exempt from a bankruptcy discharge under both Chapter 7 and Chapter 13. This means that filing for bankruptcy will not automatically end student loan payment obligations.
However, while it's difficult to discharge student loans in bankruptcy, it's not absolutely impossible. To discharge the loan you must prove repayment of the debt will impose an undue hardship on you and your dependents. This hardship has to be due to a major life trauma, like permanent paralysis, that will make it impossible for you to pay back the student loan.
You also must file a petition (called an adversary proceeding) to get a determination. If you already filed for bankruptcy, but did not request a determination of undue hardship, you may reopen your bankruptcy case in order to file this proceeding without payment of an additional filing fee.
The undue hardship you have to prove isn't small — usually this means a life-long disability or other traumatic event that will forever alter your financial situation.
But there is some good news: If you have other debts that are keeping you from paying off your student loans, bankruptcy may be a good option for you, since it can help clear space in your budget for those loan payments.
If you find you're in over your head financially with other debts that are burdening you on top of student loans, give us a call. Castle Law Office has been handling bankruptcies for Kansas City clients from more than 14 years. Call us today at 816-842-6200 to speak with an attorney. Or click here to email us and schedule your free consultation.