Student Loans, Bankruptcy and "Undue Hardship"

In bankruptcy, in order for student loan debts to be discharged, the law requires that the debtor meet an "undue hardship" test. Unfortunately, however, the law does not define what an "undue hardship", leaving the issue for the courts to decide. 

A Judge for the U.S. District Court for Maryland, in a recent Maryland case, found that a disabled woman living below the poverty line had not made "good faith attempts" to repay her student loans. The court ruled that she could not discharge her $37,400 in student loans despite living on Social Security Disability and being unemployed since 2008. 

Fortunately, there appear to be some federal loan consolidation and forgiveness programs available to debtors that cannot discharge their student loans through bankruptcy.