Student loans are one of the most difficult type of loans to get discharged in a bankruptcy. Congress has set up the student loan programs to provide a lot of flexibility to students in paying back their loans. Congress has also asked the private institutions and creditors that provide the loans to be extremely flexible in collecting the loans. In return for this flexibility, they have sent a clear message to the bankruptcy courts that they expect these loans to be repaid. The courts, taking their cue from Congress, will require that you show extreme hardship in order to have your student loan discharged. And it rarely happens.
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Extreme hardship, which is what you will need to get your student loan discharged is difficult to prove. To start with, you will have to file a separate court action to show that you are experiencing extreme hardship. Unless you are willing to spend a lot of time in the law library, it is probably best to hire an attorney to file this motion. If the court does not rule in your favor, it is not even worth filing for bankruptcy to get your student loans dismissed as it will almost certainly be denied. If, however, the court rules in your favor, then you at least have a chance of prevailing in bankruptcy court. It is best, however, not to get your hopes up.
So what do the courts look for in determining if you are a real hardship case? The first thing they base their decision on is your income and expenses. If you can demonstrate to them that you are not even capable of maintaining even the barest of living standards, you will probably meet this first test. A perfect example are the many people who attended college and due to certain circumstances, lose their homes and are now homeless. The second criteria is that your current situation shows no sign of changing. In other words, if you are homeless but have just began working at a job that could soon get you off of the streets, then your prospects are looking up and your request for hardship is likely to be denied.
The third thing that the courts look for before ruling in your favor is that you have earnestly made attempts to pay back the loan. If you have not even made an attempt to look for employment or work at a job, your case will probably fail. But, if you meet all three of these conditions, you have a good chance of winning your hardship case.
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