Bankruptcy and Student Loans in Indiana: What You Need to Know

June 10, 2024

by Attorney S. Zachary T.  Brock

Bankruptcy and Student Loans in Indiana | Brock Legal, LLC
Table of Contents

Navigating the complexities of student loan debt in Indiana can be overwhelming, especially when considering bankruptcy as a potential avenue for relief from educational debts. This comprehensive guide will delve into various aspects of handling student loan debt, outline the options available for addressing student debt through bankruptcy in Indiana, offer insights into the role of a student debt lawyer, and outline the proper procedures for pursuing student debt resolution.

Student Loans in Indiana: An Introduction

Student loans constitute a significant financial burden for many residents of Indiana. Unlike other types of debt, student loans are generally not dischargeable in bankruptcy; however, there are specific circumstances under which relief can be obtained. Consulting a professional with a working knowledge and understanding of local laws and options available for relief is absolutely critical for residents struggling with this type of debt.

Bankruptcy and Student Loans in Indiana | Brock Legal, LLC

How Does Bankruptcy Affect Student Loans?

In most cases, student loans are not automatically discharged during bankruptcy proceedings in Indiana or elsewhere in the United States. To discharge student loans in bankruptcy, one must prove that paying the debt would impose an “undue hardship.” The courts typically use the Brunner Test to determine undue hardship, which requires showing that:

  1. The debtor cannot maintain a minimal standard of living if forced to repay the loans.
  2. The circumstances leading to this hardship are likely to persist for a significant portion of the repayment period.
  3. The debtor has made good faith efforts to repay the loans.

While it is difficult to discharge student loan debt through bankruptcy, it is not inherently impossible. If bankruptcy is not the right avenue for you to take in pursuit of student debt relief, there are other options to explore. Consulting a professional well-versed in the legal knowledge of student debt law is crucial to your success in absolving, reducing or managing student loan debt.

Bankruptcy and Student Loans in Indiana | Brock Legal, LLC

What Does A Student Loan Debt Lawyer Do?

A student loan debt lawyer focuses on navigating the intricacies of student loan law. These professionals help clients understand their legal rights and options regarding their student loans. In Indiana, such lawyers can assist in preparing documentation for undue hardship cases, represent debtors in court, and provide guidance on alternative repayment plans or debt restructuring options. Their prowess is particularly valuable for debtors considering filing for bankruptcy or facing aggressive collection actions from lenders.

Bankruptcy and Student Loans in Indiana | Brock Legal, LLC

What is Student Debt Resolution and How Can I Qualify?

Student debt resolution involves finding workable solutions for managing or reducing student loan obligations. In Indiana, student debt resolution might include applying for income-driven repayment plans, which adjust monthly payments based on income and family size, or pursuing qualifications for loan forgiveness programs. To qualify for most federal loan forgiveness programs, borrowers must meet specific criteria, such as working in public service or teaching in low-income areas.

Bankruptcy and Student Loans in Indiana | Brock Legal, LLC

Criteria for Income-Driven Repayment Plans

To qualify for federal income-driven repayment plans, borrowers must meet specific criteria that assess their financial needs and their loan types. Here are the main requirements:

  1. Eligible Loans: Only federal student loans qualify for income-driven repayment plans. These include Direct Loans, Stafford Loans, and PLUS Loans made to students. Private loans and Parent PLUS Loans are not eligible.
  2. Proof of Income: Borrowers must provide documentation of their income to qualify and annually thereafter to adjust payments as needed. Acceptable proofs include tax returns, pay stubs, or certification of no income.
  3. Recertification: Each year, borrowers must recertify their income and family size, even if there has been no change in their financial status. Failure to recertify can result in increased payments and capitalization of accrued interest.
  4. Family Size: Payments are adjusted based on the borrower’s family size, including children and a spouse, if applicable, who receive more than half of their support from the borrower.

Bankruptcy and Student Loans in Indiana | Brock Legal, LLC

Loan Forgiveness Programs

In addition to income-driven repayment plans, borrowers may also pursue loan forgiveness programs, which can entirely cancel a portion of the loan after meeting certain criteria. These programs include:

  1. Public Service Loan Forgiveness (PSLF): Requires 120 qualifying monthly payments while working full-time for a qualifying employer, such as a government organization or a non-profit.
  2. Teacher Loan Forgiveness: Available to full-time teachers working for five complete and consecutive academic years in a low-income school or educational service agency, which can lead to forgiveness of up to $17,500 on your Direct Subsidized and Unsubsidized Loans and your Subsidized and Unsubsidized Federal Stafford Loans.
  3. Income-Driven Repayment (IDR) Forgiveness: After making payments under an IDR plan for 20-25 years, depending on the plan, the remaining balance on the loans can be forgiven.

Bankruptcy and Student Loans in Indiana | Brock Legal, LLC

Steps to Apply for Income-Driven Repayment or Forgiveness Programs

  1. Evaluate Your Loan Type: Verify that your loans are eligible for the desired program.
  2. Assess Employment Eligibility: For PSLF and Teacher Forgiveness, confirm that your employment qualifies.
  3. Apply Through Your Loan Servicer: Complete the necessary forms and provide documentation through your loan servicer.
  4. Annual Follow-Up: Ensure you recertify or submit proof of employment annually to maintain eligibility and benefit from reduced payments or eventual forgiveness.

Understanding these criteria and actively managing the application process are vital steps in achieving relief from student loan debt in Indiana. By following these guidelines, borrowers can effectively reduce their monthly payments and potentially qualify for loan forgiveness, easing the path towards financial stability.

Bankruptcy and Student Loans in Indiana | Brock Legal, LLC

What Are the Steps To Take For Student Loan Debt Resolution in Indiana?

To begin resolving student loan debt in Indiana, follow these steps:

  1. Assess Your Debt: Understand the types of loans you have—federal or private—and the specific terms associated with each.
  2. Consult a Professional: Speak with a student loan debt lawyer who can provide legal advice tailored to your situation.
  3. Explore Repayment Options: Investigate repayment options that may lower your monthly payments or lead to debt forgiveness.
  4. Apply for Undue Hardship if Necessary: If you’re considering bankruptcy, discuss with your lawyer whether an undue hardship claim is viable.
  5. Stay Informed: Keep up with changes in student loan laws and policies that might affect your repayment strategies.


While student loans generally remain after bankruptcy in Indiana, understanding your legal options can greatly enhance your ability to absolve, relieve or manage this challenging aspect of your finances. Consulting with a knowledgeable student loan debt attorney can provide you with the tools and confidence necessary to traverse your path to financial recovery. Whether through strategic repayment plans, loan forgiveness, or, in rare cases, discharging the debt through bankruptcy due to undue hardship, there are avenues available to regain control of your financial future in Indiana.

Attorney S. Zachary T. Brock

Brock Legal | Central Indiana & Indianapolis Bankruptcy Lawyer

Attorney S. Zachary T. Brock

Zach empowers individuals faced with financial challenges by providing them with effective solutions and unwavering support in the areas of consumer finance and bankruptcy law.

By actively listening and empathizing with each client, Zach works to gain a deep understanding of every individual or family’s unique circumstances. This helps him tailor his legal strategy to best meet the needs of each client.

“No matter what may be weighing you down financially, Brock Legal is here to help. My mission is to help navigate you through whatever stressful circumstance you may be faced with, by offering unparalleled education and service in the areas of consumer finance and bankruptcy law. Let us show you how our firm can help. Contact Brock Legal today!”