Can Student Loans Be Filed on Bankruptcy Claims?

It is a common misconception that all student loans may be included in a bankruptcy case. With few exceptions, most government-backed student loans cannot be included in a Chapter 7 bankruptcy case and are considered priority claims demanding full repayment in Chapter 13 debt restructuring bankruptcies. However, there are a few instances where student loans can be included in bankruptcy.

Disability

If the debtor can prove a serious and permanent disability that bars repayment, the bankruptcy court judge may allow all student loans to be included in his case.

Fraud

If the school possibly committed some form of fraud, such as getting more money than it was entitled to receive, then resulting student loans may be included in a bankruptcy case.

Closed School

If the school or college has closed down, the resulting student loans may be included in bankruptcy.

Qualification

If the student who went to college did not get a high school diploma or GED, then he may not have been qualified to benefit from higher education. Some student loans that resulted from this situation have been successfully included in bankruptcy.

Private Loans

Private student loans from banks and credit unions can be included in a bankruptcy case, as can student credit cards.

Resources

• Stafford Loan