Can Chapter 13 Bankruptcy Solve Student Loans?

Our Maryland Bankruptcy Lawyer Explains

Student loan debt is one of the most serious financial problems facing the country. According to American Student Assistance, the total loan amount owed by individuals comes close to nearly $1 trillion dollars. With millions of students currently facing years of financial hardship due to the cost of education, many are turning to an innovative government program that offers the possibility of discharging a significant portion of their debt.

The Public Service Loan Forgiveness Program

In 2007, the federal government created the Public Service Loan Forgiveness program. It allows individuals with high student loan debt to have their loans discharged in exchange for working in government or nonprofit jobs for a period of 10 years.

According to the program’s official website, a person qualifies for the program if they work full-time for “any…federal, state, or local government agency, entity, or organization or a not-for-profit organization that has been designated as tax-exempt.” The program is “intended to encourage individuals to enter and continue to work full-time in public service jobs.”

Through the program, a significant amount of debt can be discharged. The New York Times recently discussed a case where an individual with debt only paid $16,700 over ten years, ultimately having $28,000 of student loan debt forgiven.

Using Bankruptcy to Settle Student Debt

In the past decade, changes in laws have made student loans non-dischargeable in Chapter 7 bankruptcies. However, borrowers still have several options for seeking relief.

Although a Chapter 7 typically cannot discharge student loan debts, it does result in the discharge of credit card debts, medical bills and other financial strains. After filing for bankruptcy, many people find that they have enough income freed up to handle their student loan payments.

Some individuals may find that managing their student loan debt is significantly easier when they file for a Chapter 13 bankruptcy. This filing system, known as reorganization bankruptcy, allows debts to be restructured over the course of a three to five year repayment plan with consideration of a person’s income.

Like all debt, student loans can seem intimidating and impossible to overcome. A qualified Maryland and Washington DC bankruptcy lawyer can help you examine your options and choose an appropriate course of action.

Contact Our Office for Assistance

If you are facing overwhelming student debt, contact our Maryland and Washington DC bankruptcy attorney today. The Law Firm of Kevin D. Judd has helped many people get their financial lives back on track. We use our experience to find the solution that is best for our clients. Give us a call at (202) 483-6070.



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