According to the College Board
, the average student debt balance in 2017 was $26,900 for graduates of public four-year schools and $32,600 for graduates of private nonprofit four-year schools. With the cost of tuition only rising, and more students heading back to the classroom to earn advanced degrees to level up in their careers, it's no wonder why so many are wondering how they can seek debt relief from some of their student loans.
How To Discharge Federal Student Loans in Bankruptcy
Student loans are often not dischargeable in bankruptcy, however under specific circumstances, they may be. In order to have federal student loans discharged in a bankruptcy filing, you must file a separate action known as an adversary proceeding, which requests the bankruptcy court find that repayment of your loans would impose an undue hardship on you and any dependents you have. You can demonstrate undue hardship in both Chapter 7 and Chapter 13 bankruptcy filings; however, you must file the adversary proceeding in court and give the option to your creditors to challenge the request. While there is no one test the courts will use to determine undue hardship, they will review a number of factors, including:
- Being forced to pay the loan would mean you cannot maintain a minimal standard of living.
- The hardship will continue for a significant portion of the loan repayment period.
- You made good faith efforts to repay the loan before filing for bankruptcy.
Once you have claimed undue hardship, the court will then decide if your federal loans should be discharged. Yet, discharge doesn't necessarily mean the loan disappears completely as the court may decide to:
- Stop all loan payments.
- Require you to pay back some of the loans.
- You may be given a lower interest so you can repay the loan.
Remember, just because you claim undue influence does not mean the court will grant your discharge. But you have other options.
Undue Hardship & Student Loans: The Jones Law Firm
If you are unable to get your student loan payments discharged in your bankruptcy plan, you can work with your loan provider to get a different payment plan or alternative options they may offer. But if you would like to pursue undue hardship in your bankruptcy case, you need The Jones Law Firm on your side. We can review your case, evaluate your financial situation, and see if federal student loan discharge is a possible solution to your financial struggles. If you are ready to get started on your bankruptcy case, the Columbus, and Franklin County bankruptcy attorney Michael Ryan Jones is here for you. Contact us today