Debts owed to the University may not automatically be discharged in Bankruptcy.
Pursuant to the recent changes in the Bankruptcy Code, Educational Loans are excepted from discharge regardless of how long they have been in repayment. The change applies to bankruptcies filed after October 7, 1998. This is now equally true in Chapter 13 cases as well as Chapter 7 cases. Upon successful completion of Chapter 13 plan, any remaining outstanding balance will be non-dischargeable.
Exceptions to discharge:
Pursuant to Section 523(a)(8) of the United Stated Bankruptcy code an educational benefit, overpayment or loan made, insured or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution, or for an obligation to repay funds received as an educational benefit, scholarship or stipend, unless excepting such debt from discharge under this paragraph will impose an undue hardship on the debtor and the debtor's dependents.