Will bankruptcy discharge a 14 year student loan?

Answer

When I filed Chapter 7 and asked about my student loan, I was told by the judge that I must have paid on it for at least 7 years before it can be written off.

Answer

The Bankruptcy Code used to say that student loans could be discharged if they were more than 7 years old AND some other criteria were met. In the past few years, the Code was changed and now the Bankruptcy Code says (in 11 USC 523): "(a) A discharge ... does not discharge an individual debtor from any debt— (8) for an educational benefit overpayment or loan made, insured or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution, or for an obligation to repay funds received as an educational benefit, scholarship or stipend, unless excepting such debt from discharge under this paragraph will impose an undue hardship on the debtor and the debtor’s dependents;" This means that you can only discharge student loans in bankruptcy if you can show that repayment causes an undue hardship on you or your dependents, and this does NOT simply mean "Gee these things are hard to pay." I read a case once where the debtor became paralyzed from the waist down, and the Bankruptcy Court did not allow him to discharge all of his student loans since he could still work a desk job. It seems that you need to be unable to work anymore to have much of a chance to get student loans completely discharged, but this my vary from jursdiction to jurisdiction. There is a posting under another similar question in this same FAQ that a person who used to work for Direct Loans had some good suggestions for. Please note that nothing in this posting or in any other posting constitutes legal advice; this is simply my understanding of the facts, which I do not warrant, and I am not suggesting any course of action or inaction to any person.

First answer by Mat. Last edit by Joseph Ross. Question popularity: 205 [recommend question]