Student loan debt is a substantial financial burden on those who have it. The way student loan debt is structured can be predatory at worst, and a long-term financial problem at best. It isn’t surprising that many people who file for bankruptcy also have student loan debt. Fortunately, the right attorneys can help with discharging student loans in bankruptcy.
Bankruptcy Can Discharge Student Loans
When you file for bankruptcy, you gain several advantages in dealing with debt. Depending on which form of bankruptcy you file for, your debts can be discharged when you are done with the process. This includes student loan debt. Whether it is federal or private debt, bankruptcy can discharge what you still owe on it if you meet specific criteria.
Federal Student Loans Require an Additional Step in Bankruptcy
One of the reasons why you can benefit from working with a bankruptcy attorney is that they are knowledgeable about the process and know which steps you have to take. For example, discharging federal student loan debt follows a slightly different process than other debts. You have to complete an additional step called an adversary proceeding to have that debt discharged. Work with an attorney who can help you avoid mistakes and make sure everything is exactly right to get the best results.
Undue Hardship
To have your student loans forgiven, you need to demonstrate undue hardship. Essentially, undue hardship means that you are overburdened by your student loans and they are keeping you from being financially secure.
It can be difficult to prove undue hardship since it goes beyond just struggling with your student debts. An example of this is having paid your student debts for 15 years and still owning more than you originally took out. The judge could consider that undue hardship since you showed good faith in trying to make the payments, but couldn’t keep up with the loan through no fault of your own.
Future Payment Problems
Another way to show undue hardship is by showing the court that future payments won’t be enough to make a difference. The premise of a student loan is that you take the loan now to get through school and start your career, and career advancement will help you pay back the higher cost of the loans later. You could show that even though your career trajectory helps you pay more of the loan, no amount of advancement will help you meet the requirements of the loan. In short, no matter how much your career improves, you won’t be able to repay the loan.
Discuss Your Options with a St. Cloud Bankruptcy Attorney
Filing bankruptcy to liquidate your student loans can help, but it is important to talk to a lawyer before you take action. Kain + Henehan is a leading bankruptcy attorney in St. Cloud, MN, and we are here to help you understand how bankruptcy can give you more options. Contact Kain + Henehan by calling (612) 438-8006 or filling out the online form.
