If you’re overwhelmed by your student loan debt and struggling to make ends meet, you might be wondering whether or not you can file for bankruptcy. While difficult, it is not impossible to erase student loans in bankruptcy. Please continue reading as we explore what you should know about these matters and how our determined Wyoming Chapter 7 Bankruptcy Lawyers can help you understand your options to ease your student debt burden.
Can Chapter 7 Bankruptcy Discharge Student Loans?
Although challenging, it is possible to discharge student loans by filing Chapter 7 or 13 bankruptcy. However, to successfully discharge the debt, you’ll need to take the extra step of filing an adversary proceeding. This demonstrates that repayment presents an undue hardship. This is a lawsuit that is filed separately from your bankruptcy case.
If you want to discharge your federal student loan debt, an attestation form must be completed to provide the government with information about your loan and finances.
When pursuing bankruptcy, you need to first decide which option best fits your situation. It’s important to note that Chapter 7 bankruptcy eliminates most unsecured debts, while Chapter 13 requires debt reorganization and repayment over time.
Connecting with a skilled Gillette bankruptcy lawyer is in your best interest, as they can help you determine the best course of action and help you present the court with proof that your loans have caused undue hardship.
What is Undue Hardship?
The Bankruptcy Code doesn’t explicitly define what constitutes undue hardship. As such, the standard is open for judicial interpretation. This offers judges flexibility to decide on a case-by-case basis, but it also makes it difficult to determine whether student loans can be discharged.
The concept of undue hardship recognizes the overwhelming burden of loans that are simply unpayable or would require a lifetime to settle. For instance, an individual with a substantial amount of debt and a modest income might find it nearly impossible to balance repayments with essential living expenses. This creates an incredibly challenging situation. Demonstrating undue hardship can lead to much-needed relief by potentially discharging or restricting the debt.
In most cases, judges will use the “Brunner test” to determine undue hardship. This requires an individual to show they cannot maintain a minimal standard of living while repaying their loans, that their current financial situation is likely to persist for a significant period, and that they have made good faith efforts to repay the loans. You may be able to have y
As you can see, student loans can be discharged in bankruptcy under certain circumstances. If your student loan debt feels insurmountable, please don’t hesitate to contact our experienced lawyers at 307 Bankruptcy today. Our legal team can guide you through the Chapter 7 bankruptcy process and explore your options for managing your student loan debt.
