If I have several college loans that I am unable to pay back, will filing for bankruptcy eliminate the debt?

Asked on January 27, 2015 under Bankruptcy Law, North Carolina


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

If they are completely private loans--no federal insurance, not backed-by or issued by the government or a government controlled lender--then yes. But if there is any government connection, subsidy, insurance, etc. for the loans, then no--the government has created the bankruptcy laws and, not surprisingly, doesn't let people use those laws to get out of debtsto the government itself. (Technically, if you can show sufficient hardship, you can discharge these loans in bankruptcy, but the showing is almost impossible to make. You have to show essentially that you cannot afford even the essentials of life *and* that there is no reasonable prospect for your situation to improve--i.e. that there's no chance of you getting more work, a better job, a raise, etc. Probably 1% (or less) of people who try to discharge government-back loans in bankruptcy succeed.)

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