Student loans have long been an issue for many people. They are usually not dischargeable in bankruptcy, so those who struggle to pay them find themselves dealing with debts that continue to grow and harassment from collections agents who want to get paid.
Interestingly, the way student loans are handled may change in the future. Though nothing has been decided yet, it’s possible that at least some student loans could be dismissed in bankruptcy if the changes go through.
While it isn’t necessarily impossible to have your loans discharged in bankruptcy, it is very hard. You have to show that you have faced undue hardship and that the loans are making it so that you cannot get out of debt. Not everyone who files for bankruptcy meets those stringent conditions. (In fact, discharging the remainder of your unsecured debts can often make it easier to pay off your loans.)
The current presidential administration is looking at changing the way that the Department of Education handles undue hardship cases. This could help make it easier to get those loans under control or to have them forgiven.
There is bipartisan support to amend the bankruptcy code, as well, which would help make it easier to discharge federal student loans. The act is one to watch closely. It’s called the “Fresh Start Through Bankruptcy Act” and could help many students struggling with debt today.
Unfortunately, these changes won’t address private student loans. That’s something that you should consider discussing as you look into bankruptcy as a way to get out of debt.