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Will bankruptcy cover my student loans?

Like a vast number of Americans, you might have student loan debt that is crushing you. However, you may have heard that your student loans can’t be discharged through bankruptcy. Is this true, and if so, what can you and other Illinois residents do to relieve this financial burden?

As the U.S. Department of Education explains, you cannot get rid of your federal student loans through bankruptcy. This news can be very discouraging if you have significant student loan debt. However, before you despair, you may want to take note of the following points:

  • In rare cases, federal student loans may be forgiven for those who suffer a catastrophic injury or illness that leaves them unable to work due to a permanent disability.
  • You may gain some relief from your federal student loan debt if you worked as a teacher or in a public service government position for a certain period of time.
  • You may not be able to eliminate your student loan debt through bankruptcy, but a personal bankruptcy could free some of your resources to make your student loan payments easier to bear.

How would this work, you might wonder? Consider, for example, you successfully filed for a discharge of your eligible debts with a Chapter 7 bankruptcy or restructured your debt through Chapter 13. Whether you eliminated some debt or had your payments reorganized to more manageable payments, this can make it easier to repay your student loans, as well as meet your other financial obligations.

Dealing with debt can be difficult, but you have options. This information should not replace the advice of a lawyer.