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Student Loans and Bankruptcy Protection

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The National Association of Consumer Bankruptcy Attorneys is holding its 2015 annual convention on April 23, 2015, in Chicago, Illinois. Of particular interest of conversation and topic to be discussed at this meeting will be the subject of student loans. For years, the Association has been championing common sense reforms to allow students to refinance their high-interest student loans and to restore bankruptcy protections to private student borrowers. As a bankruptcy attorney in Miami, Fl., the issue of delinquent student loans and repayment is always a topic of interest and of concern.

Currently, it is well established that people who file for bankruptcy protection in Miami cannot eliminate their student loans. It is common knowledge that after 1978, government issued student loans cannot be discharged in bankruptcy. Similarly, since the bankruptcy changes in the law in place after 2005, private student loans are not dischargeable anymore as they were provided the same bankruptcy treatment as government loans.

For federal loans, the only solution available to most delinquent student loan borrowers is to file a lawsuit inside a bankruptcy, as student loans can be eliminated if there is a showing that there is, undue hardship. Debtors, however, must prove that there is the financial hardship that is permanent. The result has been that even with increasing numbers of people having large amounts of school loans and are also unable to pay these loans, they can only eliminate these loans if they are disabled permanently or their permanent circumstances do not allow them to repay their loans. Most lawsuits of this nature have been bitterly opposed and they have failed most the most part due to the high burden of showing someone can never repay these loans.

According to a press release issued by NACBA, pretty soon student borrowers across America may be able to enroll in an income driven repayment plan while in a Chapter 13 bankruptcy case. According to the release, the Department of Education has agreed for the first time to allow a Chapter 13 debtor to use the bankruptcy system to organize his debt with a government loan. Although cautious in their assessment of this new development, NACBA assesses the situation as a positive event that is considered to be a major opportunity that may in the near future create debt relief for millions of Americans who are delinquent in payment of their student loans. The particulars of this case have not been released and more is sure to be posted and made public.

So, there is more positive news to come. As a member of NACBA, I will be attending the convention in April and will report back to you on this blog on the student loan issues discussed. Let us know if you have any questions or comments at or call us at (305) 820-0334.

2018-08-23T16:44:02+00:00 August 23rd, 2018|Categories: Bankruptcy, Student Loans|Comments Off on Student Loans and Bankruptcy Protection