Personal Bankruptcy and Student Loans

Student Loans and Personal Bankruptcy

Some debts are very difficult to escape and student loans belong to that class. Chances are excellent that you won’t be able to walk away from these obligations. It’s possible and some people do get away with it, but their numbers are few and far between.

If you can prove that repaying a student loan would cause you a significant hardship, the court might go along. Your current situation must be rather hopeless and you must have made a good faith effort to pay off the loan in the immediate past. But you should know that this is an uphill battle. In reality the best you can expect is for some portion of the debt to be discharged.

Some have claimed that by paying a loan with a credit card, you can convert a non-dischargeable debt into a dischargeable unsecured one (as in credit card debt). This is a fallacy.

A few clever souls have even attempted to erase their IRS tax debts in this way and received a shock when they ended up being prosecuted for federal fraud. An non-dischargeable debt is just that and can’t be eliminated through trickery.

If someone should approach you and promise to help you quickly and easily wipe out your student loans, don't fall for their pitch. They will no doubt want a huge up-front fee. Once they get your money they will probably vanish into thin air.

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