Student Loans and Bankruptcy
Many types of debts are generally covered in bankruptcy laws. One type of debt that usually is NOT dischargeable is student loans. But did you know there are exceptions to this rule?
In reality, a student loan discharge is rare, but there are very specific circumstances that would allow an individual to wipe away their debt. The first step would be to undergo adversary proceedings in bankruptcy court with the aid of your lawyer. An “adversary” is like a lawsuit within the bankruptcy case, during which you have the opportunity to explain your circumstances to the judge.
Really the only way you would even be considered for a student loan discharge is if you wouldn’t be able to maintain a reasonable standard of living. In these cases, a bankruptcy applicant wouldn’t be able to provide for themselves and their dependants if they had to pay their student loan fees, so some courts will discharge part of the debt. This is done by proving in court that and “undue hardship” would result from forcing the individual in question to make monthly payments to the lender. A “totality of the circumstances” test is used to determine whether or not this undue hardship would result from the debt.
Most student loans that qualify only end up being partly dischargeable, in which case a fraction of the debt still remains. To deal with this some people file for a chapter 13 bankruptcy and pay off the debt over a set period of time.
If you are in debt and need a way out, filing for bankruptcy may be the best solution for you. Call 800-260-1402 to speak with an attorney who focuses on bankruptcy cases everyday and get your free legal consultation. Don’t wait till the debt collectors are knocking down your door. Contact a Legal Helpers attorney today.
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