Arizona students and alumni may be under the common misconception that student loan debts are not eligible to be discharged during the bankruptcy process. While legislation varies from one state to the next, only certain Arizona student loans are protected under bankruptcy guidelines that prevent certain forms of debt from being discharged. While government-funded student loans are not eligible for discharge, many private student loans are treated as any other form of debt during the bankruptcy process.

Even former students filing Chapter 7 bankruptcy may be eligible to have their student loan debt discharged. The most common reason that private student loan debt is eligible for discharge is because they are considered a standard form of consumer debt and not protected by law. Even private loans that are not eligible for discharge are no longer eligible for collection once they reach the state of Arizona’s statute of limitations.

If the private student loan debt was accumulated at an unaccredited school, it is very likely that the loans are not protected by law and are eligible for discharge. Flight schools and other fields of education that tend not to meet regional accreditation procedures are not typically considered eligible educational institutions for bankruptcy protection. Even private loans borrowed for use at an eligible institution may be eligible if it can be proven that a portion of the loans was not used for approved educational expenses.

Private loans that were used for medical or other non-educational expenses may be discharged similarly to any other commercial debt. Despite the commonly held belief that all student loans are protected through the bankruptcy process, Arizona students who borrowed from private lenders often have the option to discharge their loan debt. A bankruptcy lawyer may be able to help eligible borrowers stop creditor harassment and receive the debt erasure they are entitled to by state law.