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Cookeville Office 931-400-2218

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Is it REALLY impossible to discharge student loans in bankruptcy?

On Behalf of | Apr 12, 2018 | Blog |

It’s no secret that millions of Americans are struggling to keep up with their student loan payments. It’s not just recent graduates or young people who are dealing with this problem. In the U.S., according to Forbes:

  • As a category, student loan debt is now second only to mortgage debt.
  • About 44 million borrowers owe a total of $1.31 trillion.
  • The average 2016 graduate owed $37,172 on their loans.
  • More than two million borrowers owe more than $100,000.

The burden of student loans, combined with other obligations — and the challenges of life events like a job loss, an illness or a divorce — leads many consumers to consider bankruptcy as a way out of debt. The problem is that student loan lenders have enjoyed powerful, sweeping protections that have made it very difficult for distressed borrowers to discharge their loans in bankruptcy.

That trend may be on the verge of changing, albeit slowly, according to a developing class-action lawsuit, as reported by Market Watch.

A glimmer of hope for borrowers?

The Market Watch story highlights bigger possibilities that may emerge from the recent suit against student loan company Navient, which is accused of illegal actions regarding a specific, less common type of student debt. A Texas bankruptcy court refused Navient’s request to throw out the case.

While the vast majority of student-loan borrowers wouldn’t fall into the class that is pursuing the suit against Navient, some experts see this development as an indicator that the force field around student loan companies may weaken in the future. And that could be great news for many student loan debtors pursuing debt relief through bankruptcy.

What about MY student loans?

As things stand, student loan debt tends to be discharged in rather extreme circumstances, such as in cases involving borrowers with serious, permanent disabilities, who can show that they will never be able to pay off their debt. So most bankruptcy attorneys have been reluctant to even try to include student loan debt in typical Chapter 7 petitions.

Every debt situation is different. If you are struggling with student loans and/or other debts that are making your life miserable, it could help to talk to an experienced attorney about your options for relief.

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