Student loan debt has long been a cause of great annoyance to personal bankruptcy lawyers. Many of my Charleston area clients struggle with student loan repayment.

As I have discussed before in this blog, bankruptcy courts in South Carolina interpret the Bankruptcy Code to limit the circumstance in which you can use bankruptcy to eliminate or reduce student loan debt.

Currently, the standard for discharging student loan requires you to show undue hardship and the courts here define undue hardship as meaning that you must have some “exceptional circumstance” like a serious medical problem that would prevent employment and repayment. Some courts refer to a “certainty of hopelesness.”

Given the amount of student loan debt in the American economy, we may very well find courts in South Carolina and elsewhere re-examining the hard line definition of undue hardship. But for now, if you want to pursue a full or partial discharge of student loan debt you will (1) have to pay a bankruptcy lawyer several thousand dollars to litigate this issue; and (2) your chances of success are not very good.

So, what does this mean if you are struggling with tens of thousands of dollars in student loans?

First, if your loans are issued or guaranteed by the U.S. Department of Education, you should look at an income based repayment plan that will reduce your monthly payment obligation and, in many cases, reduce your total balance.  Most of the income based repayment plans last 10 to 20 years, so this is not a quick fix, but these plans can make your budget feasible.

There are no government mandated income based repayment plans for private student loans, so your only non-bankruptcy option would be to try to refinance your loans or to try to negotiate better payment terms. You have far fewer options if your student loans are issued by private lenders.

In addition to income based repayment plans, there are also a number of attractive options for borrowers owing Department of Education loans.

If you are disabled, you can apply for a disability discharge of debt with the Department of Education. Here is a link to an article I wrote back in 2012 about disability discharges for people found disabled by the Social Security Administration.  Here is what it means to be disabled under Social Security’s rules.

But Social Security disability discharges are not your only option.  If you are teaching full-time at an elementary or secondary school that serves low-income families, you can apply for teacher loan forgiveness. Click here for more information.