One of the most common questions my clients ask me, when they come to one of our bankruptcy law offices in Southern Florida, is what will happen to my student loans once I file for bankruptcy. My answer to them, 99 percent of the time is that you cannot get rid of your student loan debt if you chose to file for bankruptcy. Student loans are considered “non-dischargeable” debt, which means that the debt amount will remain after your bankruptcy. Furthermore continuing to pay your student loan debt after bankruptcy will help rebuild your credit faster.

However, there is a minor exception to discharge student loans in the bankruptcy. In order to discharge your student loans in a bankruptcy you must meet the following three requirements:
1. That in your current situation you can’t maintain a minimum standard of living and repay your loans
2. Your bad financial situation is likely to continue
3. You have made an honest effort to pay off your loans The debtor must file a separate action in the bankruptcy and a judge will make the determination as to whether the elements have been met and this is almost impossible to do.

We can expect major changes with regard to student loans, once the Private Student Loan Fairness Act of 2010 gets approved and made into law. Under the Private Student Loan Fairness Act of 2010 debtors will be able to discharge PRIVATE student loan debt in their bankruptcy. Student loans that are backed by the government will remain non-dischargeable but those backed by private institutions will. While this doesn’t provide 100 percent relief for those debtors who have ample student loan debt, it does provide then with limited relief as to their private student loan debt. Shmucher Law, PL is a bankruptcy law firm located in South Florida. They maintain offices throughout the Broward (Fort Lauderdale), Dade (Miami), and Palm Beach Counties (Boca Raton). If you would like to schedule a free initial consultation to determine if bankruptcy is right for you then please call Shmucher Law, PL at 954.309.5559 or 305.741.5553.