Can Bankruptcy Clear Student Loans in Florida? Here’s What You Need to Know

Written By: Attorney Robert Stiberman | Student Loans Updated April 18, 2023

Student loan debt has become a significant burden for many individuals across the United States. In Florida alone, thousands of students are struggling to repay their loans, which can lead to financial difficulties and stress. If you’re one of these individuals, you may be wondering if bankruptcy is an option to clear your student loans.

In this article, we’ll explore whether bankruptcy can clear student loans in Florida and provide you with some options to consider if you’re struggling with student loan debt.

Can Bankruptcy Clear Student Loans in Florida?

The short answer is no, bankruptcy cannot typically clear student loans in Florida. However, there are some exceptions that you should be aware of.

Bankruptcy law in the United States is governed by the Bankruptcy Code, which provides for different types of bankruptcy filings, including Chapter 7 and Chapter 13 bankruptcy. While both of these filings can help you eliminate or reduce some types of debts, they cannot typically be used to discharge student loans.

Chapter 7 Bankruptcy:

Chapter 7 bankruptcy is a liquidation bankruptcy that allows you to eliminate most unsecured debts, such as credit card debt and medical bills. However, it typically cannot be used to discharge student loans, unless you can prove that repaying your student loans would cause you undue hardship. Undue hardship is a high standard to meet and requires a showing that you cannot maintain a minimal standard of living if you’re required to repay your student loans.

Chapter 13 Bankruptcy:

Chapter 13 bankruptcy is a reorganization bankruptcy that allows you to restructure your debts and repay them over a period of three to five years. While it can help you get caught up on some types of debts, it typically cannot be used to discharge student loans, unless you can prove undue hardship. There is some hope with the 2022 implementation of the Student Loan Modification program adopted by most Florida bankruptcy districts. The program provides procedures for student loan borrowers and lenders to participate in mediation, but it does not force any party to come to an agreement. The Student loan modification program is only available for chapter 13 bankruptcy cases. 

Exceptions to the Rule:

While it is generally difficult to discharge student loans in bankruptcy, there are some exceptions to the rule. For example, if you received your student loans from a for-profit school that engaged in deceptive or illegal practices, you may be able to discharge your student loans in bankruptcy. Additionally, if you can show that your school defrauded you or that your loan was issued to someone else without your knowledge or consent, you may be able to discharge your student loans in bankruptcy.

Options to Consider:

If you’re struggling with student loan debt in Florida, there are some options that you should consider before filing for bankruptcy. Here are a few options to explore:

1. Income-Driven Repayment Plans:

If you have federal student loans, you may be eligible for income-driven repayment plans that can help reduce your monthly payments. These plans adjust your payments based on your income and family size, which can help make your payments more affordable.

2. Student Loan Forgiveness Programs:

If you work in a public service or nonprofit job, you may be eligible for student loan forgiveness programs that can help you eliminate some or all of your student loan debt. For example, the Public Service Loan Forgiveness Program (PSLF) forgives the remaining balance of your federal student loans after you make 120 qualifying payments while working for a qualifying employer.

3. Negotiate with Your Lender:

If you’re having trouble making your student loan payments, consider contacting your lender to see if they offer any options for borrowers in distress. Some lenders may be willing to temporarily reduce your payments or offer you a deferment or forbearance.

FAQs:

Q. Can you discharge private student loans in bankruptcy in Florida?
A. Private student loans are generally not dischargeable in bankruptcy, but there may be some exceptions. You should consult with a bankruptcy attorney to determine your options.

Q. How long does it take to discharge student loans in bankruptcy?
A. Discharging student loans in bankruptcy can be a lengthy process, and it can take several months to a year or more to complete.

Q. Can filing for bankruptcy affect my credit score?
A. Yes, filing for bankruptcy can have a significant impact on your credit score. It can stay on your credit report for up to ten years and can make it difficult to obtain credit in the future.

Conclusion:

In summary, while it is generally difficult to discharge student loans in bankruptcy, there are some exceptions that you should be aware of. If you’re struggling with student loan debt in Florida, there are several options to consider, including income-driven repayment plans, student loan forgiveness programs, and negotiating with your lender. However, if you’re considering filing for bankruptcy, it’s important to consult with a bankruptcy attorney to determine your options and to understand the potential impact on your credit score.

Written By:

Attorney Robert Stiberman

Robert is an experienced bankruptcy attorney adept at handling Chapter 7, 13, and 11 filings, with more than 15 years of experience in bankruptcy cases. Robert represents clients in both consumer and business bankruptcy ... Read More