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Discharging Student Loans With Bankruptcy


Student loans are a necessary evil for the majority of students in this country who simply don’t have the resources to obtain higher education through other means. Too many people who invest in their education later find themselves in a predicament where the same education that got them their dream career now results in student loan payments that simply can’t be managed on top of other debts. Bankruptcy can become an ideal option for anyone who is under pressure from mounting financial debts and is hoping to eventually rebuild credit and reduce monthly expenses. One objective of pursuing Chapter 7 or Chapter 13 bankruptcy is having certain consumer debts discharged. However, those burdened by substantial student loans should understand that student loans are unfortunately not among the debts that are commonly discharged in bankruptcy. The good news is that while student loans can be tough to have discharged in bankruptcy, that doesn’t mean that doing so is impossible.

Background on Student Loans and Bankruptcy

Before even contemplating the challenges of having student loan debt discharged, you might be surprised to find that the overwhelming majority of debtors who have them don’t even try. Shockingly, studies indicate that only about one percent of the student loan borrowers who end up declaring bankruptcy even attempt to get their student loans discharged. This likely reflects a widely spread myth that there is no way to have student loan debt reduced or wiped out through bankruptcy. However, this misconception simply isn’t the truth. Borrowers who have already filed for bankruptcy and are seeking to have their loans discharged are often able to receive either a full or partial discharge of their student loans. In order to achieve such a discharge, borrowers generally need to prove that they have an “undue hardship” to justify an attempt to discharge their student loan debt in bankruptcy.

What is an “Undue Hardship”?

Undue hardship is defined under different circumstances depending on respective court policies. While it is best to obtain legal help from an experienced bankruptcy attorney who knows which undue hardship test is applied in your local bankruptcy court, you should be aware that this standard can be challenging to successfully meet across the board (especially following a recent U.S. Court of Appeals for the Second Circuit decision that could make it more difficult to discharge student loans in bankruptcy). Speaking in general terms, most student loan debtors (unless elderly) will need to be able to demonstrate a debilitating health situation that counteracts the ability to successfully make a living.

Legal Advice You Can Trust

After deciding to pursue bankruptcy when you also have student loans you want to include, the last thing you need on top of trying to understand exactly how the bankruptcy process works in your situation is the added stress of figuring out whether the information you’re getting is even right. For this reason, it is critical to have the support of a knowledgeable legal team that has your interests at the forefront. As the Plantation bankruptcy attorneys at Nowack & Olson, PLLC, we will carefully listen to your story in order to understand the factors that have led you to our office. Afterward, we will talk to you about the bankruptcy process and advise you on how we think you should proceed. This all begins with a complimentary consultation that comes with you making the decision to reach out to our nonjudgmental legal team. Contact us today.



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