Because of bankruptcy reforms in 1998 and 2005, it is very nearly impossible to have student loans discharged in bankruptcy. There is, however, a single exception. If you can prove undue hardship, you can get it discharged.
Undue hardship is the permanent physical inability to work. In order to qualify for undue hardship, you will need to prove that you cannot physically work, you are very likely to be unable to work for the entire term of the loan, you have made a good faith effort to repay the loan, and the repayment of the loan would cause you, your spouse, and your dependents to maintain a below minimal standard of living.
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If you truly believe that you meet these qualifications, you need an experienced bankruptcy attorney to represent you in court.
While you will probably never be able to discharge a student loan in bankruptcy, bankruptcy itself could be a tool to overcoming an overwhelming burden of debt. It is possible that a bankruptcy court could discharge a part of your student loan, but even this is very rare.
Most often, the bankruptcy judge will incorporate your student loan debt into a Chapter 13 repayment plan along with your other outstanding debt. Any such debt remaining after the repayment plan will still be owed, but the rest of your debt should be paid off by then, making it easier to meet your student loan obligations.
If your financial situation is desperate, it is still not advisable to quit paying your student loan. Since this loan is federally guaranteed, you are opened up to a special sort of collection that could include seizure of your income tax refunds and wage garnishment.
Sometimes a lender will insist that you owe more on a student loan than you actually do. This miscalculation often occurs if the loan has been sold a number of times. In this situation, it is imperative that you contact the lender in writing and offer proof that you do not owe as much as they claim. If this does not correct the problem, you have the option of taking the lender to court.
Under special circumstances, student loan debt can be canceled. Your debt may be canceled if your school closed before your education was completed and you could not complete it somewhere else, or someone forged your name on the promissory note, or your school falsely certified you as eligible for a student loan when you were not, or you were forced to leave school because of a disability that started or worsened after you took the loan.
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