The Department Of Education and its loan servicers may tell you that all student loans can not be cancelled in bankruptcy. This is not correct. It is true that student loans that are made, insured, or guaranteed by a governmental unit, or non-profit institution, are very difficult to discharge. However, both private and government student loans may be cancelled in bankruptcy if “undue hardship” can be proven. The burden of proof is on the bankrupt, and must be demonstrated to the bankruptcy judge in a lawsuit (filed in the bankruptcy) called an adversary proceeding.
In addition, if the loan is not a governmental direct loan, or guaranteed by the government, we may be able to cancel that debt in your bankruptcy case. For example, private student loans are not qualified education loans if the loan proceeds are not used exclusively to attend college. These private student loans can be discharged in Chapter 7, and treated as general unsecured debt in Chapter 13.
The Law Offices Of Todd S. Frankenthal, with offices in Fort Lauderdale, Boca Raton, and West Palm Beach, helps clients that are in financial distress to get a fresh start.