Can Student Loans Be Included in Bankruptcy?

Q: Can my student loans be discharged in bankruptcy? If I file for bankruptcy, will my student loans be discharged?

A: Yes, student loans can be discharged in bankruptcy, but only in extremely rare cases.

You will have to prove that the student loans are an Undue Hardship as determined by a bankruptcy judge. This is a very, very difficult hurdle, and most people cannot meet this requirement.

For the vast majority of people experiencing economic hardship, student loans will not be discharged. Normally, student loans must be repaid even if your declare bankruptcy. This includes federal student loans and private student loans.

However, if you are having extreme difficulty repaying your student loans, you do have other options.

Here are the steps you need to take now:

Number One: Contact your lender or loan servicer right away. Your servicer is the company that sends you your monthly statements and collects your payments. Tell them that you are having difficultly and that you would like to know what all of your options are.

Number Two: Ask about income-sensitive and graduated repayment options. Income-sensitive repayment takes your income into account and adjusts the payments accordingly. With graduated repayment, your monthly payments will be small and will increase over time.

Number Three: Ask about deferment and forbearance. If you cannot afford to pay any amount, tell your servicer that you are experiencing financial hardship. Student loan providers have financial hardship programs.

Number Four: Consider consolidating your student loans. A consolidation loan can combine your student loans into one new loan with a new interest rate and lower monthly payments.

For federal student loans, visit for more information.

For private student loans, ask your loan servicer or search Google for banks that offer private student loan consolidation.

Number Five: IMPORTANT Whatever you do, do not stop making monthly student loan payments. Until you can figure out a temporary solution, it is important that you continue to make payments. If you stop making payments, your account may become delinquent or fall into default. If this happens, you may no longer be eligible for repayment relief programs and your credit could be damaged for years to come.