If you are looking to file for bankruptcy due to your student loans, you should probably think again. While this might be useful if you have financial difficulties and debts outside of your student loans, most bankruptcy courts will not discharge student loans if you file for chapter 7 bankruptcy. What this means is that even after you have filed for bankruptcy and gone through all of the bankruptcy proceedings, you will still end up owing money on your student loans. Therefore, if at all possible, you should look for another alternative to dealing with your financial problems.
It is possible that your student loan could be discharged either fully or in part, but it is very difficult to achieve this result, and you have to be able to show that you are completely incapable of paying off your student loan with the current payment schedule even though you are trying to pay it – for instance, that you are employed and making payments toward the loan each month. This is very difficult to prove, so in most cases, you will end up stuck with your student loans. This is partly due to the low monthly rates that most loans end up charging.
If you are lucky, however, it is also possible to get the loan partially discharged. This is also fairly rare and depends entirely on the decisions of the judge in the bankruptcy court that you end up filing under. Very likely, in order to get even part of your student loan debt discharged, you’ll need to prove some financial hardship and that you have made a good faith effort to pay off the loan.
Instead of filing for bankruptcy, you should look at some of the other alternatives if most of your debts are due to student loans. For instance, debt consolidation plans can help you, especially if you have many different loan payments to make each month. This way you can consolidate all of your student loans into one low monthly payment – which will make it much easier for you to pay off your student loans without major financial hardship to you. Also, keep in mind that if you do manage to pay off your student loans, you will build up a good credit rating.