It is a central tenet of bankruptcy law that “the honest but unfortunate debtor has a right to a ‘fresh start.’” This fundamental principle does not, however, apply to the debtor who cannot pay his or her student loans. Rather, the bankruptcy code provides that unless excepting such extreme circumstances, a debtor is not entitled to a discharge of his or her student-loan debt.
Currently there is an overwhelming amount of student loan debt – over $1.1 trillion in the United States! Many people file for bankruptcy, eliminate all of their credit card debt, medical bills and the like but still emerge from bankruptcy with tens of thousands of dollars in student loan debt. So the question of many of my clients is what, if anything, can be done to help with the student loans.
As with most legal questions the answer depends on several factors. The first that needs to determined is whether your loans are federal or private. Federal loans have several programs that can reduce your monthly payment or even eliminate the loan. Most do not do not involve filing bankruptcy. Here are several options: