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Renton Bankruptcy Lawyers

(253) 458-4038

Student Loans and Bankruptcy

What happens to your school loans when you file a Washington State bankruptcy?

Talk to a Renton, WA bankruptcy attorney today!

Can I discharge student loans in a Washington State bankruptcy?

Unfortunately, as a general rule, student loans cannot be discharged in a Washington bankruptcy.  School loans are generally only dischargeable when you can show that paying back the student loans would result in an undue hardship. 

What this means is that you have to file a lawsuit as a part of your bankruptcy case, which could result in a trial, to show three things:
  1. that you can’t pay your student loans and have a decent like;
  2. that this situation is likely to be permanent; and
  3. that you have made a good faith effort to pay them back in the past.

For this reason, student loans are rarely discharged in bankruptcy, but it is possible.

Having trouble paying your school loans?

If you can’t discharge your student loans, bankruptcy can still help a lot.  In a Chapter 7 bankruptcy, you can discharge most of your debts and then come up with a payment plan for your student loans with your improved cash flow.

In a Chapter 13, you can restructure all your debts and pay back at least part of your student loans with the rest of your debt.  If some of your student loans are not paid back through the bankruptcy plan (or through property being liquidated in a Chapter 7), they share evenly with the rest of your unsecured creditors.

If a bankruptcy doesn’t pay all your student loans off, you will owe what’s left when your bankruptcy is over.  As with any non-discharged debt, the interest and charges associated with student loans are not eligible for discharge either.