Does Bankruptcy Include Student Loan Debt?

The short answer to this popular question is, no, it cannot.  At least, it is very, very difficult to do so.  Student loan debt is a serious burden, as is becoming increasingly clear in today’s job economy and current U.S. laws do not allow for it to be discharged through bankruptcy.  Whether or not that will change in the future, no one can say for certain.

Why Not?

For the time being, it seems as though courts are remaining quite adamant about not allowing student loan debt to be discharged through bankruptcy.  If they let one case through, the precedent could open the floodgates.

Really?  No Options?

If you have a permanent disability, you might be able to declare exemption from student loans.  However, this is unrelated to bankruptcy.

Also, with the introduction of the Student Loan Forgiveness Act of 2012, it might become possible in the future for student loan debt to be absolved in bankruptcy.  However, it is quite uncertain whether this Act will move through Washington during this volatile political season.

One possible resort you might want to consider if you find yourself wishing for a bankruptcy option is to see if your employer might be willing to help you out.  Oftentimes, an employer will help pay off employees’ student loan debts instead of giving bonuses.  Talk to your employer to see what possibilities there might be for you.

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