If your student loan payments are becoming unmanageable, you may be wondering whether you can discharge the debt by filing for bankruptcy. While most debtors are not entitled to discharge their student loans, there are limited exceptions. As such, it’s wise to seek legal advice regarding your particular situation. In the meantime, here's what you should know about discharging student loans. 

When Student Loans Are Not Dischargeable 

Generally speaking, neither private nor federal student loans are dischargeable in Bankruptcy unless they cause “undue hardship”. Undue hardship is narrowly defined. The Court is unlikely to discharge student loan debt in most situations.

If you have other kinds of debt that are dischargeable, like medical bills and credit card debt, declaring bankruptcy can help you get a fresh start. Discharging any consumer debt will free up more of your income to pay your student loan obligations. 

When Student Loans May Be Dischargeable 

The Bankruptcy Law does recognize there are some scenarios in which some Debtors may be unable to pay their student loans. To discharge student debt, Debtors must file a legal action, called an “Adversary Proceeding”, that is separate from the standard bankruptcy proceedings, and which is more involved and costly. It is a separate lawsuit in Bankruptcy Court.

For such a proceeding to be successful, Debtors must prove they cannot maintain even a minimal standard of living if they must continue making payments. This requires you to have only minimal necessary expenses and show you have made attempts to increase your income without success. You must also demonstrate how your current financial situation is unlikely to change during the remaining loan period, perhaps due to personal or health-related circumstances, and how up to that point, you have made a “good faith” effort to meet your financial obligations in some way, including deferment of your student loans to allow you to find a means to earn more income. If you can make such a showing, student loan debt may be discharged. This relief however, is limited to the most needy of situations, since student loan debt can often be deferred or recast at lower interest rates.

To determine if your student loans are dischargeable in bankruptcy, contact Thomas A. Corletta, Attorney & Counselor at Law. Practicing out of Rochester, NY, this well-rounded and skilled lawyer has been practicing for nearly 40 years. At his criminal and civil trial practice, he helps clients resolve all kinds of issues. He’s well-versed in criminal defense, family law, traffic violations, Driving While Intoxicated, drugs, domestic violence, and bankruptcy. To request a consultation, call (585) 546-5072 or reach out on his website to set up an appointment.