Can I file bankruptcy on my student loans?

There is more student loan debt out there today than auto loan debt or credit card debt.  According to a recent report from the Federal Reserve Bank of New York, student loan debt has increased to a striking figure of $956 billion.  Unfortunately, the vast majority of people cannot file bankruptcy on student loans.  This applies to both public and private loans.

Although bankruptcy does not eliminate student loans, Chapter 7 bankruptcy can temporarily stop student loan collection actions during the course of a bankruptcy proceeding.  Chapter 7 bankruptcy proceedings are typically four to six months long.

Sometimes I meet people who have researched this issue on the internet.  They tell me they have seen websites that suggest that you can file bankruptcy on student loans if you qualify as a “hardship” case.  Despite what you find on the internet, it is very difficult to qualify for a hardship discharge for student loans.  In order to prove hardship, it takes a lot more than showing that you are struggling financially.  You have to prove that you are suffering from a situation that makes it prohibitive for you to pay back the loan and that the situation will continue into the future.  An example of someone who would qualify for a hardship discharge is someone who may be suffering from a permanent physical disability or illness.