Does Chapter 13 Bankruptcy Cover Student Loans?

Written by True Tamplin, BSc, CEPF® | Reviewed by Editorial Team

Updated on December 15, 2022

Student loans can be included in your Chapter 13 bankruptcy repayment plan, but they are almost always nondischargeable. This means that, although you may be able to delay and/or reduce your monthly payments, you most likely will not be able to expunge them.

The exception to this rule is if you can prove to the court that having to fully repay those loans would cause you "undue hardship".

For example, if you can prove that you will not be able to maintain a reasonable standard of living if you repay, that your current financial situation is likely to remain the same for some time, and that you have made a good faith attempt to pay, then it is possible that the court will discharge your student loans.

FAQs

What does bankruptcy mean?

Bankruptcy is a legal proceeding in which a debtor declares their inability to pay back their creditors.

What are the different types of bankruptcy?

There are three common types of bankruptcy known as “chapters” in the U.S. bankruptcy code, Ch. 7, Ch. 11, and Ch. 13, each with varying criteria and consequences.

What is Chapter 7 bankruptcy?

Chapter 7 is known as a liquidation bankruptcy. Most of your property will be sold to pay off your debts, then whatever debt in excess of the value of your liquidated property will be cleared.

What is Chapter 13 bankruptcy?

Chapter 13 bankruptcy is a reorganization bankruptcy. With Chapter 13, you are able to keep your personal property and reorganize your debts to a payment schedule that enables you to pay back your creditors over time (often 3 to 5 years).

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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