When declaring bankruptcy, how are federal student loans, and credit card debt impacted – if at all?
Consumer Bankruptcy Student Loans Student loans, generally, are not dischargeable under any chapter of the Bankruptcy Code unless the borrower can show “substantial hardship.” A Bankruptcy can, however, eliminate other debts that are competing for your dollars and provide a measure of peace during a Chapter 13 plan. Further, in a Chapter 13, some courts permit the debtor to separately classify a student loan so that a greater percentage of disposable income goes to the student loan than non-secured debt. Hardship Discharge: A student loan can be discharged or modified in a hardship proceeding. This is an adversary proceeding and requires the filing of a Complaint to Determine Dischargeability. A discharge will be granted if proved that repayment of the loan will create a substantial hardship on the debtor/borrower and his or her family. The hardship standard is generally interpreted to mean that the debtor cannot maintain a minimally adequate standard of living and repay the loan at th
