Can you file bankruptcy to discharge student loan debt? This common question has a two-part answer. The answer to the direct question of whether or not a person can list a student loan lender as a creditor in a bankruptcy case is “yes.” The lender can, and should, be listed as a creditor, but whether the debt can actually be discharged is another discussion. The answer to this question is “possibly,” but it may require additional work.

When any portion of a student loan is considered to be government insured, or in other words to be a federal student loan, a separate proceeding known as an adversary proceeding must be filed. If the student loan is solely issued by a private lender, such as a bank, then it may be discharged within an original bankruptcy filing.

The purpose of an adversary proceeding is to ask the court to take a look at a single debt in order to determine undue hardship on the debtor if repayment is required. Even if such hardship can be proven, there are still several options a bankruptcy judge can consider to determine repayment. The debt may be completely forgiven and the debtor never be required to make further payment. The debt may be partially forgiven, and the debtor required to pay less than the original balance at a payment rate he or she can afford. Finally, the debt may not be forgiven at all, but the lender ordered to calculate a lower interest rate and offer affordable payments. In addition, a judge may decide to do none of those and order a debtor to work directly with the lender regarding affordable payment terms.

Student loan debt forgiveness is rare. However, if your circumstances are in such a dire state that you absolutely cannot make any payment and be able to maintain a reasonable standard of living, there are options.