Loans are not dischargeable under the laws of bankruptcy unless you can show that your loan payment imposes an “undue hardship” on you, or your family. Non-dischargeable debts are those liabilities that you can’t fully eliminate when you apply for bankruptcy and will need to be paid by you. It is virtually impossible to show an undue difficulty unless you are physically unable to work and the possibilities of your getting any sort of decent work in the future are non-existent. Under the Insolvency Abuse Prevention and Purchaser Protection Act of 2005, secretly sponsored college loans are treated the same way that loans subsidized and assured by the central government or non-profit establishments. Before the new law, if you had a loan from a private-sector bank that wasn’t assured, it might be discharged under chapter seven. The new law gives these loans the same protection as the warranted loans. If you want to discharge your student loans under the “undue hardship” exception, you have to file a fresh motion with the bankruptcy court and then appear before the judge to clarify your difficulty. This isn’t a straightforward task, so if your loans are the main part of your debt, you’d be better off not facing the cruelty of insolvency as courts are very disinclined to discharge study loans.
For more information on discharging a student loan or other benefits of filing a bankruptcy petition, visit the bankruptcy lawyer directory and speak to a bankruptcy attorney. Another great resource is the National Association of Consumer Bankruptcy Attorneys.