With rising college costs, it’s not uncommon for debtors to accumulate large student loan debt.  In many cases, student loans are the largest single debt owed.  As expected, both Chapter 7 and Chapter 13 debtors want to know whether they can discharge their student loans along with the rest of their debts when they file bankruptcy.  In the vast majority of instances the answer is “no.”  In those rare instances where student loans are discharged, a bankruptcy attorney must show that payment of the debt will impose an undue hardship on you and your dependents.

Courts use different tests to evaluate whether a particular borrower has shown an undue hardship.  One such test requires showing that 1) the debtor cannot maintain, based on current income and expenses, a minimal standard of living for the debtor and the debtor’s dependents if forced to repay the student loans; 2) the circumstances preventing the debtor from maintaining the minimal standard of living continue throughout the repayment period of the student loans; and 3) the debtor made a good faith efforts to repay the loans prior to filing for bankruptcy.

Other school-related fees such as tuition and book fees owed directly to the school may not fall under the category of student loans and may be dischargeable in both Chapter 7 and Chapter 13 bankruptcy.  The ability to discharge these debts should be discussed with your bankruptcy attorney.

Although discharging your student loan debt is unlikely, you should still discuss your case with a qualified Indianapolis bankruptcy attorney to see if your particular situation fits the exception.  Bankruptcy attorneys can help you get the most benefit out of filing for bankruptcy.