Recent economic news is that student loan debt has surpassed credit card debt. The average debt load for a person coming out of college is over $28,000.00. No doubt there is a benefit to a post secondary school education.  If all goes well, the education received can lead to a better job and a higher level of income over the course of a lifetime. However, choosing the wrong course of study, an unscrupulous trade school or unexpected life events such as disability, divorce or an economic downturn in the economy can frustrate these dreams and leave a person with an large amount of debt that, generally speaking cannot be discharged in bankruptcy.

There are many variations of student loan.  In 2010 the system for student loan lending changed. Prior to 2010 private lenders issued student loans and the government guaranteed the lenders repayment in the event of default. After 2010 student loans were made directly by the government and repayment programs were put in place to allow loans to be consolidated, provide for fixed interest rates over the life of the loan and provide for the creation of “affordable” repayment plans based on income. Loans prior to 2010 may not have these options. Generally speaking a person has more options with government direct student loans than with a private lender.

How To Get a List of Your Outstanding Federal Student Loan Debt

To see what government loans you have outstanding, their balances, and dates of issuance, go to the National Student Loan Data Systems at

Criteria For Getting A Discharge of Student Loan Debt In Bankruptcy

Whether loans were issued pre or post 2010, to have student loans discharged in bankruptcy a person must demonstrate to the Court that:

  1. On their present level of income and expense they cannot sustain a minimal standard of living;
  2. Circumstance exist to show that this state of affairs is likely to persist during the entire life of the loan and there is a hopelessness in expecting the persons financial situation to change; and
  3. The person has made a good faith effort to look for work and to pay back the loans before seeking discharge.

For loans after 2010 a borrower must also show that they have attempted to work out an income based repayment modification with the government. These criteria are difficult to meet for the average person.

Profile Of A Person Who May Be Able To Get A Student Loan Discharge

The profile for a person who has a chance at having their debt discharged is an older person who has experienced a significant permanent disease or disability (perhaps qualifying for Social Security Disability), has made payments on their loan debt for more than five years and has unsuccessfully tried to work out an affordable payment plan.

Even If You Can’t Get Your Loans Discharged Chapter 13 May Help

People who do not meet these criteria find themselves hounded by debt collectors. A Chapter 13 bankruptcy can help 1) get control over the amount of monthly payments they can comfortably afford; and 2) provide court protection from aggressive debt collection activity for both themselves and for their co-signors (parents, grand parents, spouse.).

If you are overburdened by student loan debt please feel free to contact us for a consultation as to whether a bankruptcy filing may be helpful to your situation.

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