Debtors have heard over and over again that student loan debt is not eligible
for discharge, unless they meet standards related to undue hardship. But,
a recent study reviewed student loan discharges in bankruptcy with 4 out
of 10 people being successful at getting their debt eliminated. While
this may not seem like much, it actually brought up another issue; more
debtors may have qualified to get student loan debt discharged but didn’t
bother trying.
The study took one year to complete and included 69,000 debtors who may
have qualified for student loan debt discharge. The study also concluded
that a majority of debtors who filed for bankruptcy didn’t attempt
to get student loan debt discharged while possibly matching the required
criteria. Those who participated in the study were less likely to be employed,
more likely to have limited income prior to filing for protection and
had a higher probability of having a medical hardship.
Only one-tenth may make an attempt to discharge their debt. In order to
get loans discharged the debtor has to prove they don’t have the ability
to repay them now, in the future, and has made a good faith effort in
getting them repaid. Even if you don’t qualify for discharge under
Chapter 7, you may be able to repay them under
Chapter 13 bankruptcy with a court-approved repayment plan. There are different aspects to think
about when it comes to student loan debt. If you are wondering whether
it is possible to get it discharged, consider reviewing what court jurisdictions
in your area have done in the past by consulting with an attorney.