Student Loans and Bankruptcy (Update)

Student loan debt can be discharged in bankruptcy under limited circumstances. To have student loans discharged in bankruptcy, the borrower must prove that repayment would cause an undue hardship, which is difficult to do. In most cases, student loan debt is not dischargeable in bankruptcy.

However, recently the government has enacted a new process to review student loan debt in Bankruptcy. This process involves filing an adversary proceeding listing the United State Attorney as the defendant. The US attorney will then have the authority to determine if the student loan debt can be discharged. While, this will still exclude many individuals with student loan debt, it certainly opens up the door for student loan to be discharged.