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Can I get student loans discharged by bankruptcy?

Is is possible to get my student loans discharged if I file Chapter 7 Bankruptcy? I've heard different things from different people. Thank you.

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The law changed in 2005 (Bankruptcy Abuse Prevention and Consumer Protection Act of 2005) because the government felt that too many students were taking advantage of the bankruptcy laws to wipe out school loans and, in the process, harming the student loan program.  Now, privately funded student loans are handled the same way as loans guaranteed by the federal government.  That means that the student loans are not dis-chargeable unless you can convince the bankruptcy court that repaying them is causing an "undue hardship" on you and/or your family.  Unless you are physically unable to work, courts have not been very receptive to "undue hardship" arguments.  Because different bankruptcy courts in different parts of the country may interpret that requirement slightly differently, I encourage you to talk a lawyer in Massachusetts who practices bankruptcy law.



In a recent case from the First Circuit Court of Appeals Bankruptcy Appellate Panel (In re Bronsdon), the Court adopted a more reasonable "totality of the circumstances" test.   The Court held that, in considering whether the debtor has an undue hardship, bankruptcy courts should consider all relevant evidence regarding the debtor’s income and expenses.

 


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