Private Student Loan Debts and Bankruptcy in Oregon and Washington

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Private Student Loan Debts and Bankruptcy in Oregon and Washington

There is a great deal of confusion regarding the dischargeability of private student loan debts in bankruptcy. This confusion arises largely because the treatment of private student loans has changed over the course of the last decade.

Prior to October 17, 2005, if the program under which a student loan was issued, insured, administered was a for-profit, private (non-governmental) entity, the loan may have been discharged in bankruptcy. However, if the program itself, such as GSL, LAL, etc. received non-profit funding by participation of nonprofit entities, the loan was not dischargeable in bankruptcy.

For bankruptcy cases filed after October 17, 2005, the only way a student loan can be discharged is if the debtor is able to show “undue hardship” as that term is interpreted by the courts in whatever district the case is filed in. It is a an extremly difficult legal standard to meet, and the vast majority of student loan debts are simply not dischargeable.

2010-09-07T23:23:08+00:00
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