Can I Discharge My Student Loan Debt by Filing for Bankruptcy?
Student loan debt is the second-largest debt category in the United States, just behind mortgages. As of 2022, Americans owe $1.75 trillion in federal student loans. This massive amount of debt might be tough to handle for any individual, especially if you are unable to find a job that covers your monthly expenses.
If you are having trouble balancing your life while trying to pay your student loan debts, you may be wondering if Chapter 7 bankruptcy is an option for you. Unfortunately, it can get a bit complicated.
While bankruptcy can eliminate some forms of debt, student loans are a rare case. You can only discharge your student loans under specific circumstances.
If you can show that repaying your student loans would put you in an untenable financial position, your debt might be forgiven. This is not easy, but it is possible.
Proving Undue Hardship to Discharge Student Loans
The Brunner Test is used by various bankruptcy courts to see whether you are eligible:
-So far, you have done everything possible to repay your debts in a timely and responsible manner.
-If you are ordered to pay your debt, you will be unable to maintain a reasonable standard of living for yourself and/or your dependents.
-For the duration of your loan repayment term, your financial situation is anticipated to remain constant.
In most situations, the court will not consider undue hardship if you pay for items that it believes are unnecessary, such as cable television. If undue hardship is determined, the court may cancel your student loan debt entirely. This is a very difficult process, however, and most people are not successful in having their loans discharged.
The Benefits of Filing for Bankruptcy
Even if you are unable to discharge your student loans, filing for bankruptcy can still offer some relief.
One of the benefits of bankruptcy is the automatic stay. This legally binding order stops creditors from trying to collect on debts. This means that creditors cannot call you, send you collection letters, or garnish your wages.
The automatic stay gives you some much needed breathing room to sort out your finances. It can also give you time to negotiate with your creditors to come up with a repayment plan that works better for you.
Filing for bankruptcy can be a difficult process, but it might be worth considering if you are struggling to make your monthly student loan payments. If you are feeling overwhelmed, it is important to seek help. You can talk to the bankruptcy attorneys at Lewis & Jurnovoy to see if Chapter 7 bankruptcy is an option for you.
Lewis and Jurnovoy is a local law office serving the Florida Panhandle. We specialize in bankruptcy law, including Chapter 7 and Chapter 13 bankruptcy. We will work to achieve the best financial remedy for your outstanding debts.
Lewis & Jurnovoy PCB
2714 West 15th St
Panama City, FL 32401
(850) 913-9110
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