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Sometimes, student loans can be dismissed during bankruptcy

In many cases, student loans drag down the very people they were meant to help. Combined with the rising cost of school and lower-than expected wages, individuals are hit with the realization that their loans are higher, and more difficult to pay, than they expected.

Most people explain that it's impossible to have student loans dismissed in bankruptcy, but that's not true. In fact, there are cases in which student loans can be eliminated in bankruptcy completely.

Before you turn to bankruptcy, consider asking your student loan provider for a deferment or forbearance. These help reduce your loan burden until you're able to seek out a bankruptcy or find other ways to pay what you owe. If you do go through with bankruptcy, remember that you can choose Chapter 13 or 7 to handle your debts. Chapter 13 bankruptcies let you pay back debt over time, while Chapter 7 liquidates your assets to pay down what you owe.

If you choose to seek the dismissal of your student loans, then prepare to take extra steps during the case. You'll need to take your loan holder to court during the bankruptcy. The court will then decide if making student loan payments would place undue hardship on you. Show the court that paying the loans would make it impossible to meet a minimum standard of living, that you have medical issues that make it hard to pay on your loans (like mental health or physical disabilities) and that you've made an effort to repay your loans in other ways. If you can show all these things and can't afford to pay, the court may reduce or eliminate the debt from your accounts completely.

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