David M. Siegel answers in 40 seconds. Watch on YouTube · Read the transcript.
Short answer: Generally no — but not never. Student loans are usually non-dischargeable. In the right circumstances we bring a separate lawsuit inside the bankruptcy case, called an adversary complaint, arguing the loan imposes an undue hardship. We have succeeded in getting student debt reduced or eliminated that way.
The general rule, and why it exists
Student loans survive a discharge in most cases. Congress carved them out deliberately, and the exception applies to federal and most private educational loans alike.
That is the honest starting point, and it is worth saying plainly because there is a great deal of misleading advertising on this subject. Anyone promising to erase student debt through bankruptcy is selling something.
The undue hardship exception
The exception is real. It requires filing a separate lawsuit inside the bankruptcy case — an adversary complaint — asking the court to find that repaying the loan imposes an undue hardship. It is a genuine piece of litigation with evidence and a trial, not a form.
We have brought them and we have won, with debt eliminated in some cases and reduced in others. It is not routine and it is not for everyone, but it is not the impossibility it is often described as.
What makes a case worth bringing
Courts look at whether you can maintain a minimal standard of living while repaying, whether the circumstances are likely to persist for much of the repayment period, and whether you have made good-faith efforts to repay.
In practice the strongest cases involve a permanent disability, an income that has no realistic path upward, advancing age, or a degree that was never completed or never led to work in the field. A temporary setback is generally not enough.
What filing does even when the loans survive
This is the part that gets overlooked. Discharging every other debt often makes the student loans manageable for the first time. If credit cards and medical bills disappear, the money that serviced them can go to the loans.
And in a Chapter 13, student loans are folded into the plan for three to five years, with collection stopped for the duration — which buys real breathing room even though the balance survives at the end.
Wondering whether your loans could qualify?
The consultation is free and there is no obligation. You will find out what you qualify for, which debts can be eliminated, what it costs, and what the payment plan looks like.
Wheeling: (847) 520-8100 Chicago: (773) 276-6969
Your case is handled by phone — you do not need to come into either office. Even the meeting of creditors is held on Zoom. We represent clients across the Northern District of Illinois: Cook, DuPage, Grundy, Kane, Kendall, Lake, LaSalle and Will counties.
Full transcript of the video
what about student loans in bankruptcy student loans are generally non dischargeable and they’re not going to be eliminated however there are circumstances where we can bring a separate lawsuit inside the bankruptcy case known at as an adversarial complaint basically alleging that the student loan imposes an undue hardship and realistically cannot be paid back in those cases we have successfully gotten student debt either eliminated or reduced depends on the personal situation talk with an attorney about your case and we’ll be able to advise you on whether or not a student loan has a chance of being eliminated into Chapter 7 bankruptcy
Related questions
- What debts can bankruptcy eliminate?
- Chapter 7 vs Chapter 13: what is the difference?
- How long does Chapter 13 take?
About the author. David M. Siegel has represented consumer bankruptcy clients in the Northern District of Illinois since 1991 and is the author of several books on consumer bankruptcy. The firm has offices at 790 Chaddick Drive, Wheeling, IL 60090 and 10540 S. Western Ave, Suite 202, Chicago, IL 60643, and handles cases by phone for clients throughout the Chicago area.
This article is general information about Illinois and federal bankruptcy law. It is not legal advice, and reading it does not create an attorney-client relationship. Every case turns on its own facts — speak with an attorney about yours.