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Since October 7, 1998 the only way that you can include a student loan in a bankruptcy is if you can prove that they are causing you an undue hardship. This is extremely hard to prove.

Any bankruptcy cases before October 17, 2005 if your student loan was given to you by a company that was insured or their aim was for profit or a non government entity you could include it in a bankruptcy. But if those that offered you and gave you the student loan was of a non profit organization or a government funded organization they could not be included in a bankruptcy.

To prove that your student loan is causing you an extreme hardship you must prove three specific points and if you prove all but one you will not have it included in the bankruptcy. The first one is that you have things in you circumstances that show that your current financial state will continue for a very large to all of the repayment period of the student loans.

Second, you have to make good faith effort to be able to repay your debts or your student loans. By making payments for several years and showing that you are trying or did try to pay off your debt. The only exception to this one is if you never had the ability to pay the loan in the past. Lastly you must show that you would not be able to continue based on income and expenses a minimum standard of living for those of your house hold and yourself if you were made to pay this loan off.

While in the bankruptcy court you may have the means to give what is called a partial discharge this is where you have shown because of your income and expenses that you would not be able to pay the entire loan but would be able to pay a portion of the loan. But even to get a partial discharge you must still meet all of the requirements that we have listed previously.

Those that decide what can be included in the bankruptcy and what can not be included will be based upon the decision of the bankruptcy judge. In many cases a ruling is really made by just a gut feeling.

Often times there are other alternatives in apply for bankruptcy on a student loan. Because the negative aspect of applying for bankruptcy with a student loan is that while you are in court your creditors don’t have the ability to send you bills, so if it ends up ruling not in your favor. That next month you would receive a bill will all have the interest and late payments that have accrued while you were waiting for the judgment in your bankruptcy case.

Student loans tend to be one of the most flexible loans out there they have more options that you can pursue then just a standard loan. If you see that you are not going to be able to pay back your loan talk to you lender. Let them know exactly what is happening and more often then not they would be able to help you out of that situation.