Effective October 8, 1998, all educational loans became non-dischargeable in bankruptcy pursuant to 11 USC 523 (A)(8) of the Bankruptcy Code.
If a Chapter 7 bankruptcy case is filed, the student loan creditor will abide by the automatic stay, if one exists, and then, the creditor will be able proceed with collection efforts once the bankruptcy case has concluded.
If a Chapter 13 bankruptcy is filed, the student loan creditor will abide by the terms of the confirmed Chapter 13 plan. Upon completion of the Chapter 13 plan, the creditor will pursue the remaining principal, interest and collection costs which may remain on the loan. However, for as long as the debtor is paying on his Chapter 13 plan payments, he does receive the protection of the bankruptcy court from further collection efforts.
http://bankruptcy-lawyers-chicago.com/student_loans_and_bankruptcy.php
