Legal Question in Bankruptcy in Missouri

Re: Student Loans

Short answer -- It is very difficult to eliminate student loan debts.

Under Section 523(a)(8) of the Bankruptcy Code most student loan debts cannot be "discharged" (the bankruptcy term meaning wipe out or eliminate). The only way to discharge student loans is if there is solid evidence to prove that the student loan debt poses an "undue hardship" on the bankruptcy filer and his or her children. Courts look at these hardship situations on a case by case basis. Over the years Congress has changed the bankruptcy code to make it more and more difficult to discharge student loans. For example, the old law allowed a filer to discharge a student loan debt if it was over 7 years old. This provision is gone. Basically I feel eliminating student loan debts has become almost an impossible task. The hardship must be shown to be extremely severe. One possible circumstance that could be used to show hardship is a circumstance where the school associated with the loan is closed or where the school was essentially a scam. I've seen clients who took out massive loans for a fly-by-night technical college or beauty school. If the attorney can show that the bankruptcy client will suffer because they cannot make any income as a result of the "degree" they received then a court may be sympathetic. If your student loan is connected with a regular college or university education, I think proving "hardship" is virtually impossible.