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Chapter 7 bankruptcy and student loans

Most Kentucky residents are under the impression that student loans can never be discharged in a bankruptcy, but that it not entirely true. Under certain circumstances, some or all of an individual's student loans can be discharged in a Chapter 7 bankruptcy. However, the process is complex and should not be attempted alone.

Once a Chapter 7 bankruptcy is filed, it will be necessary to file what is called an adversary proceeding against the loan holder. Student loans can be discharged if the court is satisfied that paying the loans would cause an undue hardship to the filer. Three criteria will need to be met before the court will consider a discharge.

It will first be necessary for the filer to show the court that a minimum standard of living cannot be maintained while making payments on the loans. Second, the filer will have to show that extenuating circumstances, such as significant health issues or a disability, will keep him or her from making payments for a large portion of the repayment period that remains on the loans. Last, but not least, the filer will need to prove to the court that repayment efforts were made in good faith prior to requesting a discharge.

For people who qualify, the effort needed in order to get the student loans discharged will most likely be worth it. Even if a Kentucky resident is unable to get his or her student loans discharged in a Chapter 7 adversary proceeding, other debts could be discharged during the proceedings. The elimination of those debts could provide the additional income needed in order to make student loan payments.

Source:, "How to Get Your Student Loans Discharged in Bankruptcy", Devon Delfino, June 30, 2016

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