Are you suffering from crushing debt? Were you injured in an accident, or have you been unemployed for too long? Has there been a family tragedy, which has buried you in medical debt?

If you're having serious financial problems and you have a federal student loan, you may be worried. Worried that your credit will be ruined, and that something bad will happen.

Can you discharge your federal student loan through bankruptcy?

Discharge Through Bankruptcy

Just because someone is struggling financially, it doesn't mean they can automatically discharge their federal student loan – first they have to prove to the bankruptcy court that repaying the loan would cause undue hardship.

What are the chances that you can discharge your student loan debt? If you decide to file a Chapter 7 or 13 bankruptcy, the court may allow you to include the student loan in your bankruptcy if the court decides that forcing you to repay the debt would place a significant hardship upon you and your family.

This issue would be decided at what's called an "adversary proceeding" in bankruptcy court. Your creditors are entitled to challenge your request.

To determine hardship, the court considers:

• If you had to pay the loan back, would it prevent you from maintaining a minimum standard of living?
• Is there evidence that you will continue to experience significant hardship through part of the loan's repayment period?
• Have you made a good faith effort to repay the loan before you filed bankruptcy? Usually, this means that you've been paying on the loan for at least five years.

If you are unable to meet the above requirements, your student loan likely won't be discharged in your bankruptcy. If the court decides to discharge the student loan, you won't have to pay back the loan, and all collection activity will cease. Additionally, you shall become eligible for federal student aid again if you lost it in the past.

To learn more, contact a bankruptcy attorney from our directory!