Don’t Assume Your Student Loans Aren’t Dischargeable in Bankruptcy

It gets hammered into people’s heads that student loans, even private student loans, can’t be discharged in bankruptcy.  Federal student loans can’t be discharged without proof of substantial hardship.  Certain qualified private student loans get the same treatment, but there are enough exceptions that it would be wrong to assume that your private student loans can’t be discharged.  In general, the crummier the school, the crummier the program, the more likely that the loans can be discharged.  For details, look at this article at getoutofdebtguy.com.

In general, loans incurred at for-profit colleges, loans at schools that don’t offer government-backed loans (even if you didn’t get a government backed loan) aren’t covered. I’m working on cases involving CDL truck-driving schools and LPN-RN learning programs.  It looks like most of these loans will be dischargeable.  In one LPN-RN program, it looks like the loan should not even be on the credit report as a student loan, and that could raise some good claims under the Fair Credit Reporting Act.

In general, if the loan is for a for-profit college or some type of non-traditional training program, the odds are good that you can discharge the loan. If the loan covered expenses that weren’t tuition, required books and equipment, room and board (within government guidelines), at least part of the loan may be discharged.  If you talk to a bankruptcy attorney about discharging your student loans, don’t assume the attorney is right if he/she says the loan is non-dischargeable. This is especially true if you are going to a bargain basement bankruptcy lawyer.  Quite frankly, if you are paying $1000 or $1,500 plus a filing fee, for your bankruptcy, your lawyer is unlikely to vigorously pursue a claim that a loan is dischargeable.  Get a second opinion from an attorney who graduated from the Student Loan Workshop.  (I am not one, by the way, so I am telling you this as a neutral third party.)