Can personal bankruptcy eliminate student loan debt?

Student loan debt is a significant problem for many New Jersey residents. Individuals sign loans for thousands of dollars in educational support only to struggle later to find jobs so that they can begin to pay down their debts. When their ability to pay their student loans becomes difficult, they may look for options to rid themselves of their obligations.

There are debt relief options that can help individuals struggling with student loan debt, and bankruptcy is one of them. However, unlike other debts that are more conducive to bankruptcy elimination, student loan debt is very hard to eliminate through the bankruptcy process. This informational post on bankruptcy and student loan debt provides no legal advice and readers with questions about it should contact their trusted bankruptcy attorneys.

How student loan debt is handled in bankruptcy

Generally, student loan debt cannot be discharged in personal bankruptcy proceedings. However, if a debtor can show that repaying their student loans would impose an undue hardship on them, then their loans may be discharged. Proving an undue hardship, though, is not easy.

Undue hardships are evaluated based on many factors. Some of those factors include:

  • Whether the debtor tried to pay off their loans before claiming an undue hardship
  • Whether the debtor will be able to meet their minimum costs for survival if they must repay their loans
  • How the repayment of their loans will impact them and their dependents
  • Whether financial suffering will affect the debtor for the duration of their student loan repayment term

Courts look carefully at claims of undue hardship and it is a difficult standard to meet for student loan debtors.

Options for student loan debts

The inability of a debtor to repay their student loans can be uncomfortable and intimidating. When repayment becomes difficult, individuals can contact trusted debt relief and bankruptcy attorneys for help. Whether bankruptcy is an option for student loan debt will depend on the individual case, and readers with questions about pursuing student loan debt relief options are encouraged to seek the support of trusted local bankruptcy lawyers.


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