Hello everyone,
I would like to know about bankruptcy filing experiences related to school loans. Anyone know of someone who has done this? What was the outcome and how did the process proceed?
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Bankruptcy generally doesn’t discharge student loans, but some have succeeded by proving undue hardship. Each case varies, so consulting a bankruptcy attorney is advisable.
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As usual, Boomers took all the benefits for themselves and then made it hard for everyone else. It was relatively easy to clear student loans through bankruptcy until the early 1990s, but after that, it became almost impossible. This shows how selfish Boomers can be.
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Getting federal student loans discharged in bankruptcy is extremely difficult. You must prove “undue hardship,” a standard that has been very hard to meet for over 25 years, even for people on disability.
However, there are signs that this standard might be easing a bit, though it’s still tough. With income-based repayment plans often resulting in zero payments, proving that such payments create undue hardship is nearly impossible.
On the other hand, private student loans are easier to discharge in bankruptcy. You need to file for bankruptcy and then initiate a separate “adversary proceeding” with the court specifically for these loans. This process is similar to a civil lawsuit where you request relief from the debt. You still have to prove “undue hardship,” but since there are no income-based zero payments for private loans, you would need to show that you cannot afford the minimum payment and that paying it would leave you unable to maintain a basic standard of living.