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Does bankruptcy discharge student loan debt?

The total student loan debt in the United States continues to increase at an alarming rate. In 2018, the total debt owed by students surpassed $1.5 trillion. As college-related expenses continue to grow, more students will have to deal with this in the future. 

For some people, the amount of student loan debt compared with total income becomes too much to handle. Every year, many people around Ohio have to file for bankruptcy. However, you may not be able to get rid of student loan debt through this method. It varies on a case-by-case basis. 

Undue hardship

Chapter 7 and Chapter 13 bankruptcy can eliminate different types of debt, but they generally do not eliminate student loan debt. The exception to this is if you can prove paying off this debt would prove to be an undue hardship. There is a greater likelihood you can accomplish this if the debt came from a for-profit trade school or your income is incredibly low. You will need to file an adversary proceeding to begin the process. You have to show you have made a good effort to repay this debt over the years, and your current financial situation is likely to continue as is for the foreseeable future. 

Other cases

If you do not meet that criteria, then it is unlikely the court will discharge the student loans. However, bankruptcy may still be a path worth pursuing. If you have other debts, such as credit card debt, then bankruptcy can help eliminate that over time. This can help your financial situation by eliminating other kinds of debt, so you can focus on what is left over. You may still have your student loan debt at the end of the bankruptcy process, but at least you have less debt to deal with. Chapter 13 bankruptcy can help by restructuring your payments, so you make smaller payments every month. 

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