Most Arkansas residents are aware that student loan debt is not normally eligible for discharge within a personal bankruptcy case. That said, there are certain instances in which student loans can be included within the discharge process, if individuals meet certain measures of hardship. Understanding exactly what those measures may be, however, is something of a challenge for those who are considering filing for personal bankruptcy.

A recent case illustrates the difficulties of including student loan debt within a bankruptcy case. A 45-year-old woman filed for bankruptcy, and asked the court to eliminate her student loan debt of $37,000, of which nearly $25,000 is compounded interest. The woman is disabled, and has been out of work since 2008. She receives around $10,000 a year in Social Security and other forms of public assistance, but has no other source of income.  

The court ruled that the woman did not qualify for discharge of that debt, due to the fact that she failed to meet all three requirements set out within U.S. bankruptcy law. Those requirements include proving that an individual would not be able to maintain an adequate standard of living while repaying the loan, that the individual’s financial circumstances can be expected to last an indefinite period of time, and that the individual has made “good faith” efforts to repay the loan. In this case, the court found that the woman had not made sufficient effort to pay her student loan debt.

The case illustrates the difficulty of having student loan debt discharged within a personal bankruptcy case. It is estimated that the average Arkansas student will amass nearly $26,000 in student loans, which can quickly grow when interest begins to accrue. While bankruptcy is not likely to ease that particular financial burden, it can provide a much-needed measure of breathing room through the elimination of other forms of consumer debt, making it easier to meet one’s student loan obligations.

Source:, “Student Loans Can Not Be Discharged For Unemployed, Disabled Woman“, June 23, 2015