Americans have incurred over a trillion dollars in student loan debt. Student loan defaults are heavily weighing on an already fragile economy. As an Arizona bankruptcy lawyer, I usually have to give the unfortunate news that student loan debt is not dischargeable in any bankruptcy, unless a debtor can show that repaying the student loan will constitute an undue hardship.
But the “undue hardship” standard is almost impossible to show. Many people erroneous believe that student loans may constitute an undue hardship if the debtor cannot find work or make sufficient income to pay off the student loans. Most bankruptcy courts have held that if a debtor can work (even in a field unrelated to the field the debtor studied in school), it is not an undue hardship to expect the debtor to repay those loans, he could even have the option of getting one of the no credit check loans canada. In my experience, the best chance a debtor has to discharge student loans as an undue hardship is if the debtor is disabled and unable to work.
And collection of student loans is much easier than collection by other creditors. Student loan creditors can garnish wages, garnish bank accounts and take tax refunds, even without having to sue and obtain a judgment first.
Bankruptcy may still help. If a debtor files bankruptcy to discharge other debt (like credit cards and healthcare bills), this may free up additional money so that the debtor can start paying back the student loans. Furthermore, the Department of Education has its own special programs that may provide some type of student loan relief for certain debtors.