You've heard over and over again that there is no way to discharge your student loans, but that isn't really the case. In some situations, student loans can be discharged, or you can find ways to manage them more appropriately.
Student loans weigh down hundreds of thousands of people in the United States. Some have only a few hundred dollars in loans, while others have tens of thousands to pay back. If your loans are making it hard to survive, you're not alone. Here are a few facts about student loans and what you can do if you're in over your head.
1. Chapter 7 could be used to erase your student loan debts.
In some cases, a Chapter 7 bankruptcy could help you eliminate your student loans. You'll need to apply for a student loan through an adversary proceeding under your bankruptcy. Then, you need to show that your student loans are creating undue hardship. For example, if you have student loans that cost $500 a month, that's as much as an entire rent payment in some states. If you only earn $1,200 a month, that's a significant portion of your income. By having to spend nearly half of your income on student loan repayments, you're being placed in undue hardship and are not able to maintain a minimal standard of living.
Remember, you do need to show that you have made efforts to repay the loan before you filed for bankruptcy, and it's important to show that your hardship would continue if you were made to repay the loan over the entire repayment period.
2. If you can afford some payments, then Chapter 13 Bankruptcy is a better bet.
If you can't afford your student loans but also aren't able to discharge them, Chapter 13 bankruptcy might help. In this type of bankruptcy, your make payments monthly over the course of three to five years. They payments are like a consolidation of your debts, making it easier to know what you owe each month and to track that each item is paid on time. Chapter 13 bankruptcy can help you by creating reduced monthly payments, but you will still owe the remainder of the debt when the bankruptcy ends.
3. Student loan forgiveness is another option for some.
If you can't have your student loans discharged, another option your attorney may have information on for you is the potential to have them forgiven. If you work in public service for a certain amount of time, you may be able to have your loans forgiven.
Your attorney has more information on what you can do if your loans are overwhelming. There may be options you haven't considered.