As a general rule, even though filing bankruptcy can wipe away bills like mortgages, medical bills and credit card debt, most debtors cannot be discharged from their student loan debt. However, if you can prove that by repaying your student loan, it will cause an undue hardship, you may be able to get rid of student loan debt.
How to proceed:
- Get expert advice from a good reputable bankruptcy attorney.
- Begin filing either Chapter 7 or Chapter 13 bankruptcy.
- As the court will initially deny your request to discharge your student loans, you will have to file a separate adversary proceeding and prove repayment of your student loans would cause an undue hardship.
The court uses three factors to determine undue hardship:
- You wouldn’t be able to maintain a minimal standard of living if you were forced to repay the loan.
- Your financial hardship would continue for a significant portion of the repayment period if you were forced to repay the loan.
- You’ve made a good-faith effort to repay the loan before you filed for bankruptcy.
Your student loan creditor may fight you on these charges, but if your student loan is discharged, you won’t have to repay any of the loan!
If, unsuccessful with proving hardship or if you and your attorney decide this is not the best way to proceed, there are, of course other options to help eliminate your student loan debt:
- There are income-based repayment (IBR) plans
- Student loan forbearance or
- Reducing the loan debt through Public Service Loan Forgiveness by working in a certain industry, for example:
- If you are a teacher in a low-income elementary or secondary school, you could have your federal student loans discharged after 5 years of work.
- If you’re employed in the public service sector, you could have your loans forgiven after 10 years of consecutive work and payments.
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Please note: The hiring of an attorney is an important decision that should not be based solely on advertisements. Further, prior results do not guarantee a similar outcome. The laws change. Each case is different. This blog and website is designed for general information only. The information presented on this site is neither formal legal advice nor the formation of a lawyer/client relationship.