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Student Loan Cancellations In Bankruptcy Are Rare – But Possible

Lynnette Khalfani-Cox, The Money Coach by Lynnette Khalfani-Cox, The Money Coach
in Student Loans
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This post is part of week-long a series of articles about how to qualify to get student loans canceled.

By Lynnette Khalfani-Cox, The Money Coach

Under federal law, as of October 8, 1998, you can no longer discharge student loan debt in a bankruptcy proceeding. As with most laws, however, there are loopholes and exceptions to the rule.

In this case, it is technically legally possible to have your student loans discharged when you file for bankruptcy protection, but as a practical matter it is very, very difficult to get a judge to sign off on it.

To have your student loans cancelled via bankruptcy, you have to prove to a judge that repaying your educational debt would cause you a substantial and undue hardship as defined by case law in your jurisdiction.

Historically, most judges have been loathe to allow students to get rid of their student loans in bankruptcy court.

Each claim is assessed on a case-by-case basis, and student loan cancellations via bankruptcy are highly rare, even among those who’ve tried to demonstrate severe financial hardships.

This post is an excerpt from my book Zero Debt for College Grads: From Student Loans to Financial Freedom. Get the book now at Amazon.com.

Tags: undue hardship
Previous Post

Student Loan Cancellation and Discharge for Military Service

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What to Do if Your Student Loan Cancellation Application Is Denied

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All information on this blog is for educational purposes only. Lynnette Khalfani-Cox, The Money Coach, is not a certified financial planner, registered investment adviser, or attorney. If you need specialty financial, investment or legal advice, please consult the appropriate professional. Advertising Disclosure: This site may accept advertising, affiliate payments or other forms of compensation from companies mentioned in articles. This compensation may impact how and where products and companies appear on this site. AskTheMoneyCoach™ and Lynnette Khalfani-Cox, The Money Coach® are trademarks of TheMoneyCoach.net, LLC.

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