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Can You File Bankruptcy on Student Loans

by Adam Mack, J.D.
I graduated with a lot of student loan debt, and now I can’t find a position in my field; can I discharge my student loan through bankruptcy?
The short (and disappointing) answer to that question is, “Probably not.” Bankruptcy is designed to accomplish two goals: give the debtor a fresh start and give the creditors a fair share of what’s due to them. The federal government is the one that ultimately decides what constitutes a creditor’s “fair share” and when the government itself is the creditor, the “fair share” of what’s due is usually “everything.”

Student loans, while technically considered unsecured debts, became nondischargeable as a matter of law under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Bankruptcy can’t alter or discharge the amount due, unless you can prove that repaying the student loan would result in “undue hardship.” To prove “undue hardship” in Kansas, you’d have to prove that you’re unable to maintain a minimum standard of living, that additional circumstances exist that would make your substandard of living likely to persist for a significant portion of the repayment period of the loan, and that you made a good-faith effort to repay the loan.[1] Whether a person is facing undue hardship in repaying student loans is highly dependent on the facts of his or her individual circumstances. Speak with an attorney if you feel you might be facing undue hardship in repaying your student loans. (Most Topeka and Kansas City bankruptcy attorneys will give you a free initial consultation.)

Even though student loans aren’t dischargeable in bankruptcy, there are other strategies (both legal and financial) that can help you when facing overwhelming debt. Consult a qualified Kansas bankruptcy lawyer or financial planner to help you build a viable financial plan for a debt-free future.

[1] Brunner v. New York State Higher Educ. Services Corp., 831 F.2d 395 (2nd Cir. 1987)