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Can You Discharge Student Loans?

What is a Qualified Education Loan?

A qualified education loan is debt incurred solely to pay qualified higher education expenses. This rule is pretty broad. As long as the money was used for qualified higher education expenses or to refinance student loans it is a non-dischargeable qualified education loan .

Are Student Loans Dischargeable in Bankruptcy?

We're often asked whether student loans are dischargeable in bankruptcy . Unfortunately, the answer is no most of the time. There are exceptions of course, but they are construed very narrowly. In fact the issue went all the way to the U.S. Supreme Court. In that notorious decision the High Court ruled that only an undue hardship could justify nonpayment of a student loan.

What Kinds of Loans are Nondischargable?

Exceptions aside, 11 USC 523(a)(8) of the Bankruptcy Code says that when it comes to any bona fide education loans that were made, issued, insured, or guaranteed by a government unit or nonprofit institution, or other loans defined in Section 221(d)(1) of the Internal Revenue Code, a discharge in bankruptcy simply will not absolve the debtor of responsibility.

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