Student Loan Debt And Bankruptcy Question

I have a lot of student loan debt right now and I am curious- can you file bankruptcy to eliminate student loan debt or is that not possible?

You can file bankruptcy if you have student loan debt, but you must understand that student loan debts can not be discharged through a Chapter 7 Bankruptcy, unless you can prove that by making your loan payment each month you are putting yourself and any dependents you may have in a position of undue hardship. This is a highly unlikely scenario, unless you can show that you are not able to work and do not have any future prospect of working to generate the income necessary to pay off the student loan debt and provide for yourself and any dependents under your care.

If you file Chapter 13 Bankruptcy, at the very least you can consolidate your student loan payments. Chapter 13 Bankruptcy allows the debtor to pay off their debts through monthly installment payments (dispersed by a court appointed trustee to all of your creditors) over an extended period of time (typically 5 years). If the student loan debt is not paid off within that time frame, the remaining owed amount must still be paid off. Essentially, Chapter 13 Bankruptcy would only provide someone with multiple student loan payments the simplicity of making one payment per month as opposed to multiple monthly payments.

 

Another advantage of Chapter 13 is you can catch up your past due loan payments, but that said, most lenders for student loans will be pretty relaxed about helping out on past due accounts. 

Debt Blogger is right  though.  Thanks to Congress, they also made it so that even private student loans are not dischargeable in bankruptcy.  It used to be that only federally-backed  student loans weren't eligible to be cleared for bankruptcy, but that changed in 2005. 

If you have student loans you can't pay, your best bet is to contact your lender and request info about repayment options.  You can't just stop paying the loan because they'll take your tax return or garnish your wages.  Creditors have a lot of leeway when it comes to collecting past due student loans since the majority of them are federally backed.      

So if these accounts are all in collections gan I settle my student loan debt or not? Also, if they decide to take my tax refund or garnish my wages how much of that can they take? This whole thing is a mess....