Has a debt collector tried to collect on a private student loan—after you’ve gone through bankruptcy? Dealing with bankruptcy and student loans together can be a huge financial strain, but there is hope. In some cases, after going through bankruptcy, a person may have had their private student loans discharged without them knowing about it. If you find yourself dealing with bankruptcy and student loans debt collection at the same time, you may have legal options to stop those debt collection attempts.

Bankruptcy and Student Loans

An investigation into bankruptcy and student loans has shown that hundreds or even thousands of private student loan debtors may have been affected by illegal student loan debt collection attempts after bankruptcy.

People tend to assume that if a person is struggling with bankruptcy and student loans, there is nothing they can do about it and their financial crisis will just continue to get worse. But that’s not necessarily true! In many cases, private student loans can be discharged in bankruptcy. Private student loans include loans from banks, credit unions, online lenders, schools, and states.

So how does this occur? For some, private student loans may be dismissed automatically, and you may not even know that it has happened, so it’s always important to check. Moreover, all student loans can be erased in the case of bankruptcy, provided that the debtor can prove “undue hardship,” such as if their income isn’t sufficient to pay necessary expenses like rent, food, and healthcare along with their student loan payments.

While standards for what “undue hardship” means can vary, borrowers often have to pass what’s known on the Brunner test, from a 1987 federal court decision. The Brunner test has three components:

• You can’t maintain a minimal standard of living for yourself/your dependents based on your income and expenses
• Your financial situation isn’t likely to change significantly during your loan’s term
• You’ve made good faith efforts to pay the loan

Borrowers who can prove these three points may find that their student loan is dischargeable. While private student loans are more likely to be dischargeable, some federal student loans may also apply.

If you’ve gone through bankruptcy and student loans debt collectors come calling, you may have a legal claim under the Fair Debt Collection Practices Act (FDCPA), or for violations of a bankruptcy discharge order violation.

The bankruptcy doesn’t even need to be recent for you to look into having your private student loans dismissed entirely or reduced. If any time since 2005 you have undergone bankruptcy and student loans are still substantial, you may be eligible for relief. Bringing claims against a lender or a debt collector in bankruptcy court can provide compensation through actual damages for the financial loss suffered, as well as punitive damages for willful violation of the bankruptcy discharge order.

DISCLAIMER: Debt collection itself is not illegal. However, creditors and debt collection firms collecting on consumer debts must adhere to the FDCPA and respect bankruptcy discharge injunctions. Even though consumer debt attorneys are investigating these companies, their debt collection practices may be legal.