When debt becomes overwhelming, bankruptcy can sometimes feel like the only path forward. Many people hope it will wipe the slate clean, including burdensome student loans. But here’s the hard truth—most borrowers won’t be able to discharge student loan debt through bankruptcy. That doesn’t mean there are no options, but it does mean it’s important to understand what the law allows and where flexibility may exist.
Why Most Student Loans Aren’t Discharged
Federal law treats student loans differently from credit cards, medical bills, or personal loans. In nearly all bankruptcy cases, student loans remain after the process is complete. This is because current bankruptcy laws require a borrower to prove what’s called an “undue hardship” to qualify for discharge.
Undue hardship is a strict legal standard. Courts typically require proof that repaying the loan would prevent the borrower from maintaining a minimal standard of living, that the situation is unlikely to change, and that good faith efforts have been made to repay the loans. Most borrowers don’t meet this standard, and as a result, student loan discharge in bankruptcy is rare.
What You Can Do Within Bankruptcy
Even though student loans are rarely eliminated in bankruptcy, there are ways to make repayment more manageable. One option is filing for Chapter 13. In this type of bankruptcy, we can help clients reorganize their debts into a structured repayment plan. This plan generally lasts three to five years and is based on income, not the full amount owed.
Student loan payments can be included in the repayment plan, often at a reduced amount, alongside other debts. While this won’t get rid of the loans entirely, it can offer temporary relief and help avoid default or aggressive collection actions. Once the plan ends, the remaining student loan balance will still exist, but many clients find they’re in a better financial position to handle it.
Rare Situations Where Loans May Be Discharged
There are a few situations where student loans can be discharged, but they’re uncommon. For example, if a private lender does not meet certain criteria or if the loan was used at a non-accredited institution, a discharge may be possible. Additionally, borrowers facing extreme medical conditions or long-term unemployment might be able to make a case for undue hardship, though success is not guaranteed.
At Pioletti Pioletti & Nichols, we’ve seen how these rare exceptions play out and can help evaluate whether this route is realistic. But we’re always careful to set honest expectations, especially when it comes to student debt.
Getting Advice From A Local Attorney
Because these laws can be interpreted differently in different courts, it’s valuable to speak with a local attorney familiar with how cases are handled in your area. Our Peoria, IL bankruptcy lawyer will have insight into how judges have ruled on undue hardship in the past and whether certain strategies might work better than others.
We often advise clients on all the tools available—not just bankruptcy—but also income-driven repayment plans, forbearance, or consolidation outside of the court system when those options may be more appropriate.
Talk To Us About Your Debt Options
If student loans are weighing you down, we can help you explore practical solutions that align with your financial reality. While bankruptcy won’t erase student loans for most, it can still be a tool to regain control over your finances. At Pioletti Pioletti & Nichols, we’re here to offer guidance tailored to your specific situation. Contact us today to schedule a consultation and learn how we can help you move forward.