I've been told that even if I claim bankruptcy I won't be able to get rid of my student loan. Is that true? That's true. No student loan can be dismissed because of bankruptcy, no matter when it was taken out or when it comes due. The only exception to this rule -- other than death of the student! -- is if paying back a student loan will cause you what is considered undue hardship. But bankruptcy courts have very strict definitions of undue hardship. In many cases, if you meet those definitions, you would also qualify to have your loan canceled—a far better choice. If I file for Chapter 13 bankruptcy, can I include my student loan payments in my repayment plan? Yes, but be careful. Chapter 13 bankruptcy al lows an individual who has consumer (house hold) debts to make a plan to pay creditors, but there are limits to the amount of debt you can include, and other restrictions. Also, under Chapter 13 some of your creditors will get back only part of the amount you owe them and, essentially, the debts will be discharged—but this is not true of student loans. If you file for Chapter 13 and choose to pay back only a small amount per month on your student loans, you will still owe the balance at the end of Chapter 13 bankruptcy. Other related articles: |