We have received many inquiries regarding student loans and if student loans are dischargeable in a bankruptcy. The answer is complicated. In general, it is possible to discharge student loans in a bankruptcy, but there are very specific conditions, and it is very rare, nationwide, for a student loan to be discharged in a bankruptcy. In order for a bankruptcy to discharge a student loan, it must be proven to the court that it will be impossible for the client to pay back the loan. The most likely way this can be proven is through disability. If the client has a disability that would make it impossible to work and pay back the student loan, it is possible to get the student loan discharged in the bankruptcy court. This is not an easy task. It is very rare that anyone gets student loans discharged in a bankruptcy. So, if you are able to work at all in order to earn money, it is very likely that your student loan will not be dischargeable in a bankruptcy.
What needs to be kept in mind is that student loan terms are usually set at a very reasonable interest rate, usually around 3% interest. Credit cards with poor credit scores can reach up to 25% to 30% in some cases. If you are able to eliminate all of your high interest debt in a bankruptcy, you will gain more flexibility to pay back your student loan at a steady rate. Curing your most harmful debt will allow you to focus on the debts that cannot be discharged and eventually turn your financial situation to a positive direction. A 3% loan can’t get much lower and you did get some valuable education with those funds. So, don’t fear your student loan if you cannot discharge it in a bankruptcy. Use your bankruptcy rights to cure other debts to focus on your important ones.
Contact us to schedule an appointment at 855 257-7671. We have bankruptcy law offices in Riverside (Inland Empire), Tustin and La Mirada.
