• Discharging student loans in bankruptcy isn't impossible.Jupiterimages/Comstock/Getty Images
  
  During the 1970s, filing for bankruptcy and discharging student loans became popular for college graduates, especially before they started earning a monthly income. In 1998, the rules and requirements changed, affecting college graduates' ability to discharge their student loans. While it is not impossible to discharge student loans in a bankruptcy filing, the circumstances under which a student can do so are now much narrower.
  
  

Chapter 13 Reorganization

• Under a Chapter 13 bankruptcy, known as a reorganization of your debts, you may see your student loan monthly payment go down. The bankruptcy administrator determines your monthly payments to your reorganized obligations, not your creditors. This includes the holder of your student loans, according to Student Loan Borrower Assistance.
  
  While you are in the Chapter 13 repayment plan, you're responsible for making the monthly payments in the amount ordered by the bankruptcy court. When this payment period ends, you can try to get the remainder of your student loans discharged.
  
  In addition, while you are in the repayment period, the student loan holder is required to stop making collection attempts.
  
  

Restructure or Defer Interest

• While your Chapter 13 is in effect, interest continues to grow. If this is a concern, you should learn more about your ability to restructure or even defer the interest that will accrue during your reorganization payment plan, according to Student Loan Borrower Assistance. If you're successful in restructuring the interest on your student loans, it should be refigured so it is at a lower rate; it won't be completely eliminated.
  
  

Future Ability to Obtain PLUS Loans

• Discharging your undergraduate student loans in a Chapter 7 bankruptcy can impact your ability to take out student loans in the future, if you have plans to return for an advanced degree. A bankruptcy discharge can make it more difficult for you if you plan to apply for a PLUS loan. The federal government and Department of Education pull credit histories and base their decision for this category of loan on creditworthiness, according to Student Loan Borrower Assistance.
  
  If you're planning on applying for a private student loan, banks look at your creditworthiness when deciding whether to approve a loan or not. If you are approved for a private student loan and you discharged prior student loans in bankruptcy, this factor will influence the interest rate of your new student loan.
  
  

Undue Hardship Ruling and Discharge

• If repaying your student loans is posing an undue hardship on you ---- that is, paying your student loans and other expenses means you can't maintain even a minimal standard of living, the bankruptcy court can include the loans as part of the discharge of your loans in a Chapter 7 bankruptcy.
  
  Three criteria are applied in determining if you qualify to have your student loans discharged. These include: difficulty in maintaining a minimum standard of living during the repayment period of a Chapter 13 bankruptcy; repayment bars you from maintaining a minimum standard of living; and whether you made an effort to repay your student loan obligations before filing for bankruptcy. In addition, you will be asked if you have been in repayment for at least five years, according to Bankruptcy Home.