- Repayment will not allow you to maintain a minimal standard of living,
- That the hardship will continue for a significant portion of the repayment period, and
- That you made good-faith efforts to repay the loan before filing for bankruptcy.
The majority of the reported opinions allowing student loans to be discharged are related to medical issues. Others include elderly people with limited incomes and no chance of increasing earnings. In some instances, the court orders the lenders to agree to partial repayments and repayment on better terms than available through the conventional programs.
- Deferment – A period during which repayment of the total sum of the loan, interest, and any interest that has capitalized is temporarily delayed.
- Forbearance – Allows you to stop making payments or reduce your monthly payments for a period of 12 months.
- Changing repayment plan – Depending on your qualifications, this can help you obtain lower payments.
- Cancellation – In certain limited circumstances, your student loans can be canceled, forgiven, or discharged. For example, if you are totally and permanently disabled, you may be relieved from having to repay your federal student loans. Some teaching and public service jobs qualify for loan discharge. Discharge may also occur if the school closes or falsely certifies your eligibility to receive the loan. Your student loan debt is discharged upon your death as well.