Zach, one of the readers of my blog, asks about student loans that are not government-backed, and whether bankruptcy can be a help with those loans from private lenders.
Unfortunately the answer is still a big N.O.. Back in 2005, bankruptcy law was changed (Bankruptcy Abuse Prevention and Consumers Protection Act) to extend the same protection to for-profit student loan lenders as is given to nonprofit and government lenders, meaning that no student loans can be discharged through bankruptcy court. (The only exception ever made is if you can prove “undue hardship” to the judge, and that is an extremely difficult standard to satisfy.)

Just this past month, the U.S. House defeated a bill that would have partially changed the situation by allowing private student loans more than five years old to be treated just like any unsecured loans.

So, sorry, Zach, no can do. However, in earlier blogs I’ve written about cases in which an overall strategy for handling debts through bankruptcy was able to ease the pressure on the client to the point that he was able to make payments on the student loans.

I need to add here that the minute a debtor senses that matters are getting out of hand is when that person needs to seek out professional help. The earlier I, as a consumer bankruptcy counselor and bankruptcy lawyer, can meet with a client, the greater the number of options will remain open for us to use.