Home > Bankruptcy and Student Loans

Would I still have to make my student loan payments after bankruptcy?

 

 

 

 

 Unfortunately, in most cases, bankruptcy does NOT discharge the debtor’s obligation to pay back the student loans.   As a generic rule, student loans are considered non-dischargeable debt unless the debtor can prove undue hardship to the bankruptcy court.  In other words, in order to discharge student loans, the debtor must show the court that student loan payments are causing him/her undue hardship. A person filing for bankruptcy must file a separate application for undue hardship and pay fees in addition to filing the other required bankruptcy papers and paying the standard fees.

Most courts apply the following test in order to determine whether the debtor qualifies for discharge of his/her student loans:

1.       Debtor’s income is so low that he/she cannot maintain the minimum standard of living if he/she is required to make student loan payments;

2.       Debtor’s income is not likely to increase during significant duration of the payment period; and

3.       The Debtor has made good faith efforts in the past to try to make student loan payments.

Note that it is extremely difficult to prove undue hardship in a bankruptcy case and, therefore, while you are considering whether to file for bankruptcy, it is best that you assume that you would still be obligated to make student loan payments after bankruptcy.