Student loans are difficult, but not impossible, to discharge in bankruptcy. To do so, you must show that payment of the debt “will impose an undue hardship on you and your dependents.” Courts use different tests to evaluate whether a particular borrower has shown an undue hardship.

When did student loans stop being dischargeable in bankruptcy?

1976
listen to this post Federal student loans became nondischargeable in bankruptcy proceedings in 1976. Before then, debtors could discharge student loan debt along with most types of consumer debt. That ended in 1976 when Congress amended the Higher Education Act of 1965.

Can a student loan be discharged in bankruptcy?

Prior to 1976, you could discharge your student loans in bankruptcy. Congress then changed the law: student loans were dischargeable if they had been in repayment for five years. Subsequently, that period was extended to seven years.

When do you qualify for a student loan discharge?

But if your school closes while you’re enrolled or shortly after you withdraw, you could qualify for student loan discharge. More specifically, you must have been enrolled during or within 120 days of the school closing. If you withdraw more than 120 days after it closes, you won’t be eligible for student loan discharge.

Do you need a lawyer to get a student loan discharge?

Since student debt is not typically included under bankruptcy filing, you may need to enlist a student loan lawyer. This legal process can be long and expensive, so you must consider whether filing for bankruptcy discharge is worth the battle.

When was the dischargeablility of student loans changed?

Congress then changed the law: student loans were dischargeable if they had been in repayment for five years. Subsequently, that period was extended to seven years. In 1998, Congress removed dischargeablility except if a debtor could show that paying back the student loans would create an undue hardship.