Back in the 1970s college students could have their student loans forgiven or at the very least by themselves some time by declaring personal bankruptcy. However back in 1998 this loophole was closed! The law was changed in such a way that it made student loans pretty much nondischargeable!

In other words today when a student declares personal bankruptcy, student loans still will have to be paid. It’s almost impossible to get out of it, however there are free extremely difficult to fulfil criteria were a student could get past the nondischargeable rule providing they did indeed fulfil all three of them. They are as follows:

1 -If you can prove that paying the loan payments would force you below those that the minimum standard of living.

2 – if you can prove that making these payments will plunge you into total poverty during most of the time you are required to make the student payments.

3 – if you can prove you have been attempting to pay for your student loans for some time before your filing for personal bankruptcy. Very often you won’t be able to discharge your personal student loans until you have been making payments for five years.

So what options does a student in this situation have?

As you can see there really aren’t many options open to you if you need to declare personal bankruptcy, student loans however can often be consolidated which for many people can make the whole process of paying them back a whole lot easier. Another thing that a very tiny percentage of students benefit from is when there college closes permanently before their graduation, in these situations students often have a pretty good chance at getting out of their loans, but naturally that doesn’t help 99.9% of students.

If however a student’s loans have been consolidated and already been stretched out for years, sometimes it can actually be difficult to work out who is owed what. In this situation a student may be able to challenge the very enforceability of the loans. The students creditors are the ones who must legally prove what the student in question owes them, so if they cannot do so anymore they would not be able to force the student to pay them any longer.

So at the end of the day for most students thinking of declaring personal bankruptcy, student loans are still going to be an issue for them to pay off although they will be able to benefit from consolidation of loans and probably paying scheme that better suits their situation. At the end of the day though whatever happens your creditors should not be allowed to take more than a 10% portion of your monthly pay cheque for the paying off of personal student loans.