Whether a bankruptcy discharge relieves an individual of his or her obligation to repay a student loan or grant overpayment is now determined by whether a court has ruled that repayment would impose an undue hardship on the borrower and his or her dependents. If the bankruptcy was filed on or after October 8, 1998, the loan or grant obligation is not affected by a bankruptcy discharge unless the debtor received an undue hardship ruling from the court.

Prior to October 1998 changes in bankruptcy law, whether a loan or grant overpayment was discharged in a bankruptcy depended on different rules, depending on when bankruptcy was filed, how long the student loan had been in repayment, and what kind of student loan the debtor had received. Generally, loans or grant obligations owed and in repayment for more than five years, and later seven years by the time the borrower filed for bankruptcy relief were dischargeable by reason of the age of the debt. Debts owed and in repayment status for shorter periods were dischargeable only if a court ruled that repayment would pose an undue hardship. In addition, a general discharge received in a Chapter 13 (wage earner plan) bankruptcy that was filed before November 5, 1990 was sufficient to discharge a student loan or grant obligation without regard to how long the debt had been owed, even if the debtor failed to prove that repayment would pose an undue hardship.

You should present documentation regarding your bankruptcy case to Department representatives, who can advise whether the Department considers bankruptcy law to relieve you of the obligation to repay this debt. You may seek advice from your bankruptcy counsel in this matter as well.

If your bankruptcy petition was dismissed rather than discharged, then none of your debts, including your loan, were discharged.

What to Do:

You must submit to Department representatives the following documents to show when, and under what provision of law, you filed for, and received, relief in bankruptcy:

  • Court ruling, if any, regarding whether repayment would impose an undue hardship
  • Copy of the notice of the first meeting of creditors
  • List of creditors filed in the bankruptcy proceeding (schedule A-3)
  • Final Discharge Order

Be sure to include a cover letter stating your name, social security number and the identification number(s) of the loan or grant obligation you believe was discharged.

Check a recent demand letter or bill for this loan; if the address to which you are requested to send payment is the National Payment Center in Atlanta, GA, you should submit your documentation to:

U.S. Department of Education
Educational Credit Management Corporation
P.O. Box 65128
St. Paul, MN 55165
FAX: 1-651-325-3302