In order to discharge a student loan in bankruptcy, you must prove that it presents an "undue hardship." This not only means proving that being forced to repay the loan would prevent you from maintaining a minimal standard of living for a significant portion of the repayment period. Bankruptcy courts have also required that there must be at some point some good-faith effort to repay the loan.
The courts look to see things like:
- if the debtor has applied for the Income Contingent Repayment Plan if it is a federal loan
- whether payments made were minimal compared to the overall balance owed
- if the student loans are a significant portion of the overall debt
Therefore, it is clear that if you are seeking to discharge a student loan in bankruptcy, you must do more than just show current, dire financial straits. You must seek to be employed to the maximum of your potential, and address payment in some significant way. Find out more!