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Can I discharge my student loans during bankruptcy?

Student loans have burdened almost an entire generation of Maryland students with decades worth of debt. Many borrowers do not even try to file for bankruptcy, while others buy into the myth that their student loans do not qualify for any type of relief. Although it might be the case that discharging student loan debt is difficult, it is certainly not impossible.

Approximately two million people carrying student loan debt have filed for bankruptcy in the past 10 years. Of those, less than 1% filed for an adversary proceeding to have their student loans discharged. Looking at 2017 specifically, this means that only 447 out of 241,000 student loan borrowers filing for bankruptcy pursued an adversary proceeding. Out of those 447, 61% had some or all of their student loans erased.

So where does the myth that student loans are not dischargeable come from? According to one expert, both the Department of Education and the banks are complicit in dissuading borrowers from trying to discharge student loans. Another reason is that positive results are often not made public. When a debtor argues that his or her student loans were not an educational benefit and are therefore dischargeable, a lender may push to settle to prevent a specific case from affecting future court cases.

Arguing that a student loan was not an education benefit is just one approach. Others in Maryland find success in demonstrating that paying back their loans will create undue hardship. Whichever route a borrower chooses to take, it is important for him or her to remember that lenders and creditors are not always willing to help out those who are struggling — even when it comes to bankruptcy. Instead of pushing through alone, having the right advocate on one’s side can be helpful during this process.

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