Student Loans May Be Dischargeable In Bankruptcy

Bankruptcy has long been an avenue for resolving debt burdens and debts otherwise causing an individual financial hardship. However, not all debts are equal and some have not been eligible for a debt discharge through bankruptcy. For example, some tax debts, unpaid domestic support payments, and student  loans are among those most difficult to obtain resolution under bankruptcy. This is because the current bankruptcy code reserves strict criteria for which debts qualify and which debts are ineligible.

There has been much discussion recently surrounding the idea of student loan debt reform and cancellation. Although no formal action has taken place, a recent 10^th Circuit court has joined several other circuit courts that suggest private student loans should be eligible for discharge in bankruptcy.

In an earlier filing, McDaniel vs  Navinet Solutions concluded that an education loan does not constitute “an obligation to repay funds received as an educational benefit” under Section 523(a)(8)(A)(ii) of the Bankruptcy Code. A similar case held that private educational loans are not statutorily excepted from discharge absent undue hardship; or, in other words, can be discharged like other debts.

For questions about student loan debt relief, contact our team of Fort Worth bankruptcy attorneys at 817-203-0585.