I am a bankruptcy attorney in Arizona ($995/Chapter 7) and am finding myself increasingly helping clients deal with their student loans. I've heard that as many as 1/3 of all student loans are now in default. Student loans are becoming the next economic crisis. Young people are having the hardest time in this economy yet they're saddled with this huge debt. Congress has made it increasingly difficult over the years to discharge student loan debt. Now, you have to show "undue hardship" in order to get them discharged in a bankruptcy. This usually means demonstrating that you cannot earn a sufficient income due to a medical injury or similar egregious circumstances. Chapter 13 bankruptcy may provide some relief. In a Chapter 13, a debtor comes up with a payment plan to pay a set amount of money to his creditors over 3-5 years. This includes the student loan lenders. So for 3-5 years, there will be some reduction in the amount required to pay on student loans.
Below are my favorite articles on student loans and dischargeability, which discuss how to show "undue hardship" and provide some cases where they have been successfully discharged. They also discuss the history of how Congress has treated student loans and legislation currently under consideration.
The Alexander Bankruptcy Law Firm provides low low cost Chapter 7 and 13 personal bankruptcies. $995 Chapter 7 or $2500 Chapter 13 bankruptcies plus court filing fee. Free consultation with a compassionate attorney who will handle your case personally. Call 24/7, available to meet with you around your schedule. 602-910-6812. Conveniently located in Central Phoenix along the Camelback corridor.