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Student Loans Can Be Dischargeable in Bankruptcy – Case by Case Basis

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Recently a case was decided in favor of the debtor for discharge of her $112,000.00 owed on her student loan.


  • 44 Year Old Single Mom
  • Debtor earned a Ph.D. and taught high school.
  • Debtor’s mandatory contribution was $344 per month to which she added $220 per month.

Debtor argued even if the debtor were to eliminate the $220 per month voluntary contribution, that additional money was insufficient to allow her to maintain a minimal standard of living if she were required to make the monthly payments of $915.00 to pay off the debt in 15 years.

Creditor argued:

  • Debtor’s take-home pay was higher than she reported based on the incorrect fact that her pension savings was voluntary.
  • Countered that debtor could apply for ICRP (Income Contingent Repayment Plan) and lower the payments considerable to $346 for 120 months.

Court Ruling:

  • Availability of an ICRP did not preclude possible discharge when undue hardship is met.
  • Given debtor had no plans to change jobs, current inability to repay was likely to be long term.
  • Debtor made a good faith attempt to repay the debt; had paid $9,000 and applied for loan deferral.
  • Debtor taught school in a rural area, which would have qualified her to $17,500 in credit against her student loans for every 5 years that she taught school.

In summary, every case is different and you cannot broad brush a subject in Bankruptcy.   Each case must be taken case by case.    You can always contact me to look at your individual case for student loan debt.