Student Loans and Bankruptcy

Chapter 13 bankruptcy: As part of a Chapter 13 bankruptcy, you can reorganize your nondischargeable debt. However, you still have to pay 100 percent of your nondischargeable debt under this option. While you are in the bankruptcy there will be no collection action against you.

IBR: Student loan lenders offer various loan repayment options. Some are based on income and others extend the life of the loan. IBR, or Income Based Repayment, is a new option available that should be considered.

Extreme hardship within or outside of a bankruptcy: If you are able to prove a certain threshold of hardship you may be able to get rid of student loan debt completely. If you can successfully prove undue hardship, your student loan will be completely canceled. In bankruptcy, to discharge student loans you have to file and adversary proceeding.