Student Loans: Can They Ever be Discharged?

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The year 2012 was the year that the student loan bubble popped, for lack of a better description. Now, in 2013, 90+ day student loan delinquency rates are creeping higher than ever before. The amount of student loan debt owed in the United States is roughly $1 trillion.

The amount of delinquent loans continues to rise due to a variety of economic factors. Although several sources have indicated a slight improvement in the employment outlook for Americans, there are still millions who are underemployed or unemployed. The lackluster job market combined with regular layoffs, furloughs and budget cuts has left many consumers unable to repay their tuitions.

In an effort to take positive action regarding their employability, many Americans make the decision to attend more college in order to make a career change, with high hopes that a new career path will present better employment opportunities and higher pay. This cycle often repeats itself, with many labor markets showing consistent weakness and offering limited work options to Americans, even in their second or third careers. As their job options dwindle, mounting student loans loom threateningly behind them, making it impossible to get ahead financially.

All of these factors have led to an increase in loan deferments and write offs. Americans want to know: How can I reduce my student loan debt?

Unfortunately, student loans are not frequently forgiven in Chapter 7 bankruptcy cases. It may be possible to have part of your student loan forgiven in a Chapter 13 bankruptcy filing, but you would have to show undue hardship as well as make consistent, agreed-upon payments for the duration of your Chapter 13 term. At the end of your bankruptcy term, some or all of your student loans may be forgiven. A word to the wise, though: typically only federally funded student loans are eligible for forgiveness, as opposed to private education loans.

Certain professions will increase your chances of being granted loan forgiveness. Volunteering with the Peace Corps, enlisting in the military, teaching, practicing medicine or non-profit legal positions are all jobs that you may want to consider in order to have a portion of your federal student loans forgiven.

There are many programs you can participate in that can increase your chances of being eligible for loan forgiveness. Working with a qualified bankruptcy attorney like George Veitengruber will increase your chances of finding the appropriate forgiveness programs for your unique and individual situation.

If your student loans are not easily forgiven even after all avenues have been exhausted, there are other options that may help you find the debt relief that you need. Special debt relief services, debt consolidation, and debt settlement are all options that will help you reorganize your debts in order to make your payments more manageable and reasonable. To learn more about all of your student loan debt options, call an experienced bankruptcy attorney for a free consultation today.

Photo courtesy of Sean MacEntee

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2 Responses to Student Loans: Can They Ever be Discharged?

  1. Pingback: What Can I Do About My Non-Dischargeable Debts? | Veitengruber Law

  2. Pingback: Is Unpaid College Tuition Dischargeable in Bankruptcy? | Veitengruber Law

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