If you file Chapter 13, your student loans in Chapter 13 bankruptcy almost always survive the case: you still owe them when your three-to-five-year plan ends. Federal law singles student loans out from the debts that get wiped clean, and the only way to change that is to win a separate court fight proving repayment would cause “undue hardship.” What Chapter 13 does give you is real, immediate relief around the edges: collections stop, co-signers are shielded, you make one monthly payment through a trustee, and every month of that payment now counts toward federal income-driven repayment forgiveness.
Collections Stop the Day You File
Filing a Chapter 13 petition triggers the automatic stay, a federal court order that blocks nearly all collection activity against you.1Office of the Law Revision Counsel. 11 U.S. Code 362 – Automatic Stay Phone calls, demand letters, lawsuits, wage garnishments, bank levies, and tax refund seizures all have to stop. The stay covers federal and private student loans equally, and it stays in place for the length of your case.
That matters most for defaulted federal loans, where the government can garnish wages and seize refunds without ever going to court. Filing shuts those tools off overnight. What the stay does not do is freeze interest. Your balance keeps growing the entire time you are in bankruptcy.
Co-Signers Are Protected Too
Chapter 13 has a second stay that Chapter 7 does not: the co-debtor stay. Once your case begins, creditors cannot pursue anyone who co-signed a consumer debt covered by your plan.2Office of the Law Revision Counsel. 11 U.S. Code 1301 – Stay of Action Against Codebtor For a parent who co-signed a private student loan, this is often the single biggest reason to choose Chapter 13 over Chapter 7.
The protection is not absolute. A creditor can ask the court to lift it, typically by arguing that your plan does not propose to pay the co-signed debt, that the co-signer actually received the loan proceeds, or that the creditor would be irreparably harmed. If a motion to lift the stay is filed and you do not respond within 20 days, the protection ends automatically.2Office of the Law Revision Counsel. 11 U.S. Code 1301 – Stay of Action Against Codebtor Watch for those motions and answer them.
How Student Loans Get Paid Inside the Plan
Student loans sit in the lowest tier of your plan, alongside credit cards and medical bills, as nonpriority unsecured debt.3Office of the Law Revision Counsel. 11 USC 507 – Priorities You send one payment each month to a court-appointed trustee, who divides it among your creditors. Student loan servicers get a share of whatever is left after secured debts (like your mortgage or car loan) and priority debts (like recent taxes and child support) are covered.4United States Courts. Chapter 13 Bankruptcy Basics
That share is usually a fraction of what a normal student loan payment would be, and it rarely keeps up with interest. A $50,000 balance at 6% receiving minimal trustee distributions over five years can easily grow by $15,000 or more. This is the trade-off at the center of Chapter 13 for student borrowers: years of collection relief in exchange for a bigger balance at the end.
Plan Payments Now Count Toward IDR Forgiveness
A Department of Education regulation that took effect July 1, 2024, changed that math meaningfully for federal borrowers. Under 34 C.F.R. ยง 685.209(k)(4)(iv)(K), you get one month of credit toward income-driven repayment forgiveness for every month you make your required Chapter 13 plan payment, even if none of that money actually reaches your loan servicer. You do not need to have been on an IDR plan before filing, and your Chapter 13 plan does not need to treat the student loans in any special way.
A full five-year plan produces 60 months of IDR credit, applied against the 20- or 25-year forgiveness clock depending on which IDR plan you are on. For someone who already had years of qualifying payments before bankruptcy, that stretch can move forgiveness noticeably closer.
One caveat on which IDR plan to use: the SAVE plan was ended by the One Big Beautiful Bill Act, enacted in July 2025, and the Department of Education is moving affected borrowers into other options. PAYE, IBR, and ICR remain, and the Chapter 13 forgiveness credit applies to any IDR plan, not just SAVE. When your case ends, confirm with your servicer which plans are open for new enrollment.
Getting Them Actually Discharged Is a Separate Lawsuit
Federal law specifically excepts student loans from discharge in both Chapter 13 and Chapter 7.5Office of the Law Revision Counsel. 11 U.S. Code 523 – Exceptions to Discharge The only route to a discharge is proving “undue hardship” to the bankruptcy court.6Office of the Law Revision Counsel. 11 USC 1328 – Discharge The statute does not define the term, so courts developed their own tests. Most circuits use the Brunner test, which requires you to show that repayment would prevent you from maintaining a minimal standard of living, that this is likely to persist through most of the repayment period, and that you made good-faith efforts to repay.7U.S. Department of Education. Undue Hardship Discharge of Title IV Loans in Bankruptcy Adversary Proceedings A minority of courts weigh the same factors under a broader “totality of circumstances” approach.
Either way, the standard is high. Temporary unemployment or a tight budget will not clear it. Courts have looked for conditions like permanent disability, chronic illness, or an age that makes career improvement unrealistic. Partial discharge is possible; the court can reduce the balance rather than erase it.
Filing bankruptcy alone does not put the question in front of a judge. You have to file a separate lawsuit inside your case, called an adversary proceeding, against each loan holder whose debt you want discharged, and serve them with a complaint explaining the hardship. The court filing fee is $350. Attorney fees are the larger cost: a case the government consents to might run a few thousand dollars, while a fully contested proceeding with discovery and trial can run well into five figures. Many bankruptcy attorneys charge for adversary proceedings separately from the underlying Chapter 13, so ask before you file. Skip this step and your loans automatically survive the case; no court will review them on its own.
The DOJ’s Streamlined Process for Federal Loans
In November 2022, the Department of Justice and the Department of Education rolled out a standardized process for evaluating undue hardship claims on federal student loans.8United States Department of Justice. Guidance for Department Attorneys Regarding Student Loan Bankruptcy Litigation You fill out an attestation form covering your finances, government attorneys consult with the Department of Education, and if you meet the standard they can consent to discharge or negotiate a partial discharge without a full trial.9U.S. Department of Justice. Student Loan Guidance The legal standard did not change, but the practical cost of pursuing discharge dropped considerably.10U.S. Department of Justice. Fact Sheet – Department of Justice’s New Process for Student Loan Bankruptcy Discharge Cases
The process works in courts that apply either Brunner or totality of circumstances. It covers only loans where the federal government is the creditor or has an interest, so privately held FFEL loans and all private student loans fall outside it.7U.S. Department of Education. Undue Hardship Discharge of Title IV Loans in Bankruptcy Adversary Proceedings Private lenders can fight your claim as aggressively as they choose.
Private Loans Are Not Always Treated Like Federal Ones
The discharge exception covers loans funded by the government or a nonprofit, and separately, “qualified education loans” as defined by the tax code.5Office of the Law Revision Counsel. 11 U.S. Code 523 – Exceptions to Discharge Federal loans are always in the first bucket. Most private loans from major lenders land in the second.
But not every private loan meets the tax-code definition. Loans that exceeded the school’s cost of attendance, loans to students at unaccredited schools, and loans for non-degree programs may fall outside it. When they do, they can be dischargeable as ordinary unsecured debt without any undue hardship showing. If you carry private student debt, it is worth having a bankruptcy attorney look closely at the loan documents.
What Happens When the Case Ends
When you finish your plan, the court discharges your remaining eligible debts. Student loans are not among them unless you won an adversary proceeding.6Office of the Law Revision Counsel. 11 USC 1328 – Discharge The automatic stay lifts, collection resumes, and you owe the balance plus all the interest that accrued during the plan.
Do not wait for the servicer to call. Federal loans that were in default before bankruptcy stay in default after it, and wage garnishment, tax refund seizure, and Social Security offset can restart. Contact the servicer as soon as your case closes and either enroll in a repayment plan or start loan rehabilitation before those tools kick back in.