The Only Way to Get Student Loans Discharged in Bankruptcy
There are 45 million student loan borrowers in the country, with nearly $1.6 trillion dollars in debt. While students are being sold on the “American Dream,” the cost of living is rising and jobs are getting more competitive without an equal raise in pay. The fact is, so many people are drowning in student loan debt that it’s becoming something of a national epidemic.
What options do you have if student loans are overwhelming you and threatening to swallow all your finances?
There are options like negotiating a new payment plan or moderating a settlement. In the case of payment plans, you can have income-based, graduated, extended-graduated, extended-fixed or pay-as-you-earn payment plans. This is your first step to making student loans more manageable. We can help you determine which option might be the best fit for you.
With moderating a settlement, this option is most ideal in cases where a relative has offered to pay off your debt. With this option you would still want legal help because it is important to have an attorney review all terms of the offer and make sure you are careful what information you disclose to your lawyers.
Some think that filing for bankruptcy may be the only solution. But you must be incredibly careful in filing for bankruptcy. According to bankruptcy law there is only one way to get your student loans forgiven and this is if you qualify for undue hardship.
The Undue Hardship Exemption
The test for undue hardship can vary between courts. Additionally, some courts interpret the undue hardship exception to be an all or nothing proposal, in which you either qualify or you don’t and there is no portion of debt that can be forgiven in between. But one of the more common and objective tests is called the Brunner test.
The Brunner test measures you undue hardship based on three factors, all of which you must qualify for. First, you must be in a state of poverty based on your current income and expenses. Second, you current financial situation must be demonstrated to be likely to continue for a significant part of the repayment period. Lastly, you must have shown good faith in your effort to repay the loan.
Only if all three of these criteria are met may you have the potential of discharging your student loan debt in filing for bankruptcy. But before you begin these steps, it is highly recommended that you seek an attorney. If you file for bankruptcy and do not meet the standards for undue hardship, you will have ruined your credit and still have to pay the student loans.
We don’t wish bankruptcy or adverse student loan debt on anyone, but we are here to fight for you if you find yourself in dire circumstances.