Student Loans & Bankruptcy

If you have student loans that are taking over your finances, you may be curious about bankruptcy.

The bad news is that, as a rule, student loans are not discharged by any type of bankruptcy. However, under the 11 U.S.C. sec. 523(a)(8), there are two exceptions to this rule. The first is that a loan can be discharged if it can be proved to be neither 'insured or guaranteed by a governmental unit' nor 'made under any program funded in whole or in part by a governmental unit of nonprofit institution.'

The second exemption allows the loan to be discharged if paying the loan will 'impose an undue hardship on the debtor and the debtor"s dependents.' You should be aware that it is difficult to have your student loans discharged under the hardship rule, although it is not impossible.

When you want to discuss your student loan discharge, contact our law office to set up a time to meet with a Chicago bankruptcy lawyer.