The general rule states that student loans will typically not be erased after filing for bankruptcy. There are two exceptions to this generalization. In order for the exceptions to apply, the court must decide that the particular facts in the case are worthy of such exception. The first exception states that student loans may be erased after filing bankruptcy if the loans are not insured or guaranteed by a government unit nor made under any program funded in whole or in part by a government agency or non-profit institution. The second exception states that student loans may be erased if paying the loan will impose undue hardship on the person that has to pay the loan back or any of their dependents.
At one point, the law used to allow for student loans more than 7 years old to be erased but this law is no longer applicable. When one of the exceptions apply to a particular case, the individual filing for a bankruptcy may still need to file a separate petition in the court for the court to erase the student loans because it is not always something that is done automatically.
Overall, being faced with making a decision as to whether you want to file for bankruptcy can be emotional and a bit overwhelming to deal with. If you are currently trying to decide whether to file a bankruptcy petition in Illinois and have questions or concerns with the process, it is essential that you contact an attorney that can better assist you with any dilemmas that may occur. To discuss your situation with an experienced bankruptcy attorney, please contact Hamilton & Antonsen at 815.729.9220.