Should I Try to Have My Student Loan Discharged?
With over $1.2 trillion in student loan debt currently plaguing the US and burdening borrowers of all ages, the issue has become a hot topic—including why it’s not easier to discharge student loan debt in bankruptcy. Currently, the perception is that it’s nearly impossible, and many would like to see that changed.
In both a Chapter 7 or Chapter 13 bankruptcy, one can attempt to prove undue hardship to see if the student loan can be discharged along with most of their other debts. In both chapters of bankruptcy filings, the automatic stay will halt student loan servicers from trying to collect, but that is a very temporary fix and the loan amount does not go away. The Chapter 13 bankruptcy may allow for the filer to begin paying a smaller monthly sum, offering some relief, but when the bankruptcy ends, the loan is still there and needs to be paid in full as before.
The Adversary Hearing
To prove undue hardship, a separate proceeding must be held in the form of the adversary hearing. An experienced bankruptcy attorney should be assisting you throughout this entire process, and especially advising you if you decide to pursue proving undue hardship.
During the adversary hearing, the court will administer the Brunner test in establishing hardship. This test measures whether the filer would be able to maintain a minimal standard of living if they had to continue repaying the loan and that hardship would endure through the time of the bankruptcy filing. It must also be obvious that the filer has been showing good faith in making payments and did not just take out a student loan with plans to default eventually.
A Student Loan Discharge May be More Attainable than You Think
This process is obviously not an easy path to choose, but there are indications that more judges may be listening to the burden borrowers today are carrying due to student loans. Most borrowers of student loans and those filing for bankruptcy do not file for undue hardship, most likely due to the extreme reports they have heard of individuals being denied. Many may have a better chance than they realize, but their case must be examined by an attorney well-versed in both bankruptcy and student loans.
Contact Us Now
At Fitzgerald & Campbell, APLC, we can help you explore your options in bankruptcy, as well as issues with student loans. Our attorneys have decades of experience in serving clients in similar financial situations. Let us review your case and discuss what would work best for you. We are here to help!
Call us today for a free consultation at (855) 709-5788, or email us at firstname.lastname@example.org.
Posted in: Student Loan Debt