Student Loan Discharge In Chapter 13 Bankruptcy Possible In Most Cas...

Student loans are almost impossible to discharge in Chapter 7 bankruptcy. The debtor must show actual hardship to discharge a student loans. Courts interpret hardship very strictly. If you are able to work you probably don’t have hardship sufficient to discharge a student loan in Chapter 7.

In Chapter 13 cases student loans are not dischargeable if the creditor objects the discharge. I recently spoke with a well-placed source who indicated that actually student loan creditors usually do not file an objection to discharge in Chapter 13 proceedings. As a practical matter, a Chapter 13 bankruptcy could be used to discharge a large part of student loan debt. Of course, the debtor would be gambling that his case would not be one of the exceptional cases where the student loan creditor does file an objection.

I do not believe most of my clients would file Chapter 13 primarily to discharge student loan debts. However, I think that the probability of student loan discharge should be considered more than it usually is  in pre-bankruptcy planning decisions.