You may have heard that student loans cannot be discharged in bankruptcy, but……

In order to potentially have your federal student loans discharged as a result of bankruptcy you have to file a separate action, called an adversary proceeding. When you file the adversary proceeding you are asking to have the court determine that repaying your student loans will cause you undue hardship.

Be prepared, when you go to bankruptcy court your student loan creditors might be present and will try to challenge your bankruptcy request.

If you are granted any bankruptcy determination there are three different outcomes.

In some cases your student loan could be fully discharged, meaning that you won’t have to repay any of your loan.
Other cases could have a partial discharge, in which case you would have to repay a determined portion of your loan.
And in the third case you might have to repay your loan with a different term or a lower interest rate.

Please note that it’s rare for student loans to be discharged in bankruptcy, so don’t depend on this.