How To Fill Bankruptcy With Student Loans

Susan Kelly

Oct 09, 2022

You may have heard that student loans can't be wiped out by filing for bankruptcy. This statement is not completely true. Some student loans can be cancelled, but the process is harder, and the requirements are higher than other kinds of debt. But if a new bill supported by Democrats and Republicans passes, it might be easier to file for bankruptcy to get rid of student loans. The new begging through 2021 Bankruptcy Act was written by Senators Dick Durbin and John Cornyn. People with federal student loans would be able to file for bankruptcy a second time 10 years after their first payment is due.

How to File for Student Loan Bankruptcy

If you're thinking about going bankrupt because of your student loans, falling behind on your payments will have a big effect on your life. A lender might have won a court case against you and taken money from your pay. Your federal student loans might have been late or in default, so the central government might have retained your tax repayment and used it to pay off your state student lends. Most likely, your student loans aren't the only reason you're having trouble with money. If all you owe is student loans, you probably won't be able to get rid of them by filing for bankruptcy. Student loan bankruptcy isn't easy to do, and it doesn't mean you won't have any more debt.

But if you have bad credit, bankruptcy could help you get back on your feet faster than trying to pay off your debts. Bankruptcy for student loans is not a special kind of bankruptcy. To get your student loans forgiven through bankruptcy, you must first file for Chapter 7 or Chapter 13 and then file an "AP," which stands for "adversary proceeding." You must file the AP to get rid of your student loans.

Filing for Student Loan Bankruptcy

You should think about more than just which type of bankruptcy is best before you file for bankruptcy.

Your Loans Could End Up Costing You More

There can be a lot of trouble if you use bankruptcy to pay off student loans. The insolvency court will determine how much you must pay every one of your creditors monthly. If you have other debts more important to the law than your student loans, you might end up paying more interest on your student loans if the court lowers the amount you have to pay each month.

If Your Only Debt Is A Student Loan, You Shouldn't File

This is not something that the Department of Education likes. For instance, it could mean that you are trying on purpose not to pay back your student loans. You probably won't win your case if you don't owe any other money. Only people who can't do anything about their situation can get out of their student loans.

The Type Of Loan You Have Could Affect How Well You Do

If you file for bankruptcy, a private student loan may be easier to get rid of or settle than a federal student loan. The reason is that you can pay back federal student loans based on how much money you make, but you can't do that with private student loans. If you qualify for this plan, many courts may think you should be able to pay back your debt.

Filing costs money

Except if the court suspends them, you must pay court filing costs. It's also a great idea to select a bankruptcy attorney who has experience having student loan debt erased. But if you can pay for a lawyer, the court might decide that your situation isn't bad enough to get your student loans cancelled. Find an attorney who might take your case for free or for a fee that the court would agree to.


Getting through the bankruptcy proceedings does not ensure a certain outcome, particularly as judges will utilize their own unique experiences and points of view, as well as previous judgments on other cases, to make their conclusions. Judges will also look at how things turned out in other cases similar to yours. This means that the court could decide whether to cancel your student loans or not. Your case's fate will also be determined by how your student debt lenders manage it — If they believe you're in excessive danger and whether going to court is worth the cost. Since these are big companies, they have lawyers to help them, which is a good reason for you to have one too.

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