Student Loans and Bankruptcy

Can You Discharge or Restructure Student Loans in Bankruptcy?

Student Loans and BankruptcyWhen you’re struggling to meet your day-to-day expenses, finding a way to pay significant student loan debt may seem impossible. American bankruptcy law was designed for just such occasions, to give people a chance for a fresh start. Can you use bankruptcy law to renegotiate your student loan payments or completely wipe out student loan debt? What limitations are there?

Discharging a Student Loan

There’s a myth that you cannot discharge student loans under any circumstances. While it’s difficult to wipe out student loan debt, it can be done, with what is known as the undue hardship exception. To successfully discharge student loan debt, you must demonstrate that it would cause you undue hardship to keep making student loan payments. Though the standards for establishing undue hardship vary from jurisdiction to jurisdiction, many courts apply the following test:

  • The debtor has made a good faith effort to repay the loans.
  • If required to repay the loans, the debtor, based on income and expenses at the time of filing, would not be able to provide a minimal standard of living for themself and any dependents.
  • The circumstances making it difficult or impossible for the debtor to pay are likely to continue for a significant portion of the remaining repayment period of the loan.

Some courts, on the other hand, choose to make a decision based on “a totality of the circumstances.”

Restructuring a Student Loan

You can always use a Chapter 13 debtor reorganization to get some relief from student loan payments in bankruptcy. When you file for protection under Chapter 13, you have the opportunity to negotiate a new monthly payment on your student loans, one that will be affordable under the circumstances. Typically, that reduced payment will be in effect for a period of 36 to 60 months. At the end of that period, you will still owe any balance remaining on your student loans. In most situations, your lender will set up a new payment schedule.

Contact an Experienced Rockwall, Texas, Bankruptcy Attorney

At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Rockwall County, Collin County, Dallas County, Hunt County, and the surrounding counties.

Speak Your Mind


Call Rockwall bankruptcy lawyer Carrie Weir at 972-772-3083 or fill out the contact from below for a free, confidential consultation to discuss your options.

How Can I Help

Complete the contact form
and I will email you.

  • This field is for validation purposes and should be left unchanged.

Consumer Bankruptcy

Can I keep my car? Will bankruptcy stop a foreclosure? Will I ever be debt-free again? How will I ever pay these medical bills?

Read More

Chapter 7 Bankruptcy

If you want to stop creditor harassment, eliminate repossession debt, stop garnishments and keep your house, and car, a Chapter 7 bankruptcy could help.

Read More

Chapter 13 Bankruptcy

Are you in jeopardy of losing your house? Are you making good money but everyone is asking for payment right now? Do you want or need to stop collections?

Read More