Questions about discharging student loans under Chapter 13

[brdm82]

A quick summary of my situation:

I was a undergraduate at NCSU and I'm finishing my graduate degree now. I got into quite a bit of trouble with drugs in college and while I was there I ended up racking up a ton of credit card and other miscellaneous debt. I've cleaned up quite a bit since then (even though I still smoke on the weekend between running track) I'm worried than when my student loans payments kick in a few months I'm not going to be able to handle all of the debt even though I currently live at home with my parents in Charlotte, NC. I've heard lots of conflicting information about discharging student loans under bankruptcy. It seems that there's few very circumstances where the borrower can bundle the loans under the bankruptcy.

My question is what are these circumstances and are they specific to North Carolina?

Thanks!

[LadyInTheRed]

Student loan is only dischargeable if not discharging it would be an undue hardship. See 11 U.S.C. 523(a)(8) An undue hardship is very hard to prove. My understanding is that you have to show that you will never have the ability to pay the loan, usually due to a disability that prevents you from earning income. A student loan will not be discharged unless the debtor files a petition to determine dischargeability.

If you are unable to make the scheduled payments on your student loans, you should contact the lender to request a deferral or reduced payment.

[brdm82]

The term 'undue hardship' is what I was wondering about. I really think moving out of my parent's house and starting a real life on my own is going to help me mature up and meet my financial obligations.

I'm about to enter the job market soon which should help me sort out my money problems. I did work briefly at a Catholic high school as a coach, but really the money wasn't much compared to the hours I put into the job.

I'm going to search the forums for more people in my situation. Thanks again for the advice.

[LadyInTheRed]

One common rule of thumb: If you can't pay off your dischargeable debt within 5 years, consider bankruptcy. If getting rid of the cc debt will make the student loan payments manageable, it may be a good option. But, if you have no income or property to protect, BK could be premature.

You will find lots of good information here. Keep reading and asking questions. Welcome to the board!