With the declining economy and lack of jobs, more people are going back to school. They hope more education will qualify them for a higher-paying job. They live on student loans and borrow to pay all expenses. Unfortunately, more education is no longer a guarantee of a higher-paying job or even a job. Before using this strategy, do independent research on your future job market and pay scale. You may make a bad situation worse.

Bankruptcy does not deal well with most student loan situations.

A Chapter 7 bankruptcy may wipe out your other unsecured debt so that you have enough to pay student loans.

A Chapter 13 bankruptcy may lower your student loan debt by including the student loan debt in the Chapter 13 payment so that you can live.

However, the student loan debt continues to accrue interest and when the bankruptcy is over, the problem still exists. But in most situations, without showing extreme hardship, bankruptcy will not discharge the debt. Fortunately, at least for federal student loans, there are many income-driven repayment options that may help with federal student loans without filing bankruptcy.