Can Your Student Loans Be Discharged In Bankruptcy?

Student loan debt is a prevalent issue in the United States, with millions of Americans grappling with its weight. For many, bankruptcy seems like a viable option to alleviate this burden. However, the intersection of bankruptcy law and student loan debt is complex. Whitten & Whitten aims to provide clarity on the matter. We are committed to helping our clients understand their options regarding bankruptcy, and the question of whether student debt can be discharged in bankruptcy is complicated. Call our firm to receive case-specific advice.

Understanding Bankruptcy and Student Loan Debt

Bankruptcy is a legal procedure that allows individuals or businesses to seek relief from debts they cannot repay. There are two primary types of personal bankruptcy: Chapter 7, which involves the liquidation of assets to repay debts, and Chapter 13, which involves the reorganization of debts and the creation of a plan to pay them off over time.

Student loan debt, on the other hand, is often considered a special type of debt. As a general rule, student loans are not discharged in bankruptcy. However, there exists an exception known as undue hardship.

The Undue Hardship Exception

The “undue hardship” exception is a clause that can potentially allow for the discharge of student loans in bankruptcy. To prove “undue hardship,” three things must typically be established:

1. Based on current income and expenses, maintaining a minimal standard of living would not be possible if forced to repay the loan.
2. Exceptional, long-term circumstances make it unlikely for the loan to be repaid for a significant period of time.
3. Good faith efforts have been made to repay the loan.

However, proving these factors can be a challenging task and requires filing an adversary proceeding in Bankruptcy Court against your student loan creditors. It’s important to discuss the next step with a lawyer who can prepare you for the road ahead.

Role of a Bankruptcy Attorney

With the complexity of bankruptcy law and the stringent criteria needed to prove undue hardship, seeking the help of an experienced bankruptcy attorney becomes crucial. At Whitten & Whitten, our team can provide comprehensive, professional services to guide you through this difficult process. We can help evaluate your case and determine if filing for bankruptcy is the right step for you.

Impact of Bankruptcy on Student Loans

Even if student loans are not discharged in bankruptcy, filing for bankruptcy can still have a significant impact on managing student loan debt. For instance, filing for Chapter 13 bankruptcy can help reduce the overall monthly debt burden. While making Plan payments, all creditors, including student loan lenders, must stop the collection of debts.

Call Our Firm Today

Navigating the intersection of bankruptcy and student loan debt is a complex process. Although student loans are typically not discharged in bankruptcy, exceptions do exist. Understanding these complexities and making informed decisions requires professional guidance. At Whitten & Whitten, we are committed to helping individuals navigate through these tough financial decisions. If you’re struggling with student loan debt and considering bankruptcy, we encourage you to reach out to us for a consultation.