If you’re overwhelmed by education debt, you may be asking, “Can I file bankruptcy on student loans?”
The answer is yes, it’s possible — but that doesn’t mean they’ll be erased right away. Unlike credit cards or medical bills, student loans aren’t usually wiped out automatically.
Filing for bankruptcy and getting rid of student loans are two different things. When you file for bankruptcy, your student loans are included in the paperwork, so they’re listed as part of your case.
However, most borrowers must take extra steps to actually have those loans discharged so they are legally eliminated.
Does Bankruptcy Include Student Loans?
To clarify, including student loans in bankruptcy simply means they appear in your case. It doesn’t mean they go away.
To discharge student loans, you usually need to go through a separate legal process and show that repayment would cause undue hardship.
The Bankruptcy Code does not define “undue hardship.” Rather, individual courts typically interpret the term when deciding whether student loan debt can be discharged.
Undue hardship generally means:
- You can’t maintain a basic standard of living if forced to repay.
- Your financial situation is unlikely to improve significantly.
- You’ve made a good-faith effort to repay the loans.
If you can prove undue hardship, you may be able to have student loan debt discharged. But it’s a high bar to clear.
What It Takes to Discharge Student Loans in Bankruptcy
If you’re thinking about filing bankruptcy for student loans, be prepared to offer a full picture of your financial situation. This may include:
- Income records and tax returns
- Monthly expenses
- Student loan statements
- Payment history
- Medical or hardship-related documents
The goal is to demonstrate why repayment isn’t realistic.
How to Include Student Loans in a Bankruptcy Filing
Step 1: File the Bankruptcy Case
Most people file under:
- Chapter 7: Often called liquidation bankruptcy, Chapter 7 can discharge many unsecured debts. A trustee may sell nonexempt property to help repay creditors, although many filers can keep basic property through exemptions.
- Chapter 13: Chapter 13 is a court-approved repayment plan for people with regular income. You make payments over three to five years, then some remaining eligible debts may be discharged after the plan is complete.
Filing bankruptcy student loans in either chapter does not automatically erase them.
Step 2: Start the Adversary Proceeding
To actually discharge student loans, you usually must file a separate legal action within your bankruptcy case called an adversary proceeding.
This is where you present evidence of undue hardship. The court then decides whether some or all of your student loan debt can be discharged.
What Type of Bankruptcy Includes Student Loans?
Both Chapter 7 and Chapter 13 allow student loans to be included in the filing, but neither automatically removes them.
Chapter 7
- Typically faster (a few months)
- Focuses on discharging eligible debts
- Student loans remain unless you prove undue hardship
- May involve asset liquidation
Chapter 13
- Involves a three- to five-year repayment plan
- May temporarily pause collections
- Includes court-supervised repayment
- Student loans usually remain unless separately discharged
What Happens to Student Loans if You Declare Bankruptcy?
In short:
- Your loans are listed in your case
- Collection activity may pause temporarily
- The balance doesn’t usually disappear
The final outcome depends on whether you pursue discharge and how the court rules on your situation.
What Borrowers Should Understand Before Filing Bankruptcy
Before deciding to pursue bankruptcy for student loans, it’s important to understand:
- The process can take time and may require detailed documentation.
- You may need to prove long-term financial hardship.
- Outcomes vary based on your situation and loan type.
- Bankruptcy can affect your credit, even if loans aren’t discharged.
Keep in mind that full discharge isn’t the only possible result. Some borrowers may receive partial relief or other outcomes depending on the case.
Final Thoughts
Student loans are usually included in bankruptcy, but discharging them typically requires extra steps and proof of undue hardship.
If you’re struggling with student loan debt, understanding how bankruptcy and student loans work together can help you evaluate options.
