Imagine the following scenario: You have hit financial trouble and are contemplating bankruptcy to help get your financial house in order. You hope that bankruptcy will provide some respite from your financial follies and/or staggering debts. Unfortunately, this is not the case if you owe student loans.
If you are being crushed by massive student loan debt, you, unfortunately, have few options when it comes to debt forgiveness. Bankruptcy is certainly not the best strategy. Other debts, such as a mortgage and auto loans, are dischargeable through bankruptcy. For student loans, you carry the burden of establishing “undue hardship” and a court must agree with that determination for a student loan to be wiped out. It is within the court’s discretion to decide whether a borrower meets the undue hardship standard, and that standard varies depending on the court since the bankruptcy code does not provide an actual definition of the term.