Student Loans and Bankruptcy

by James Stillston

Student debts have reached unprecedented levels and many recent graduates are suffering the effects of the economic burden of this burden, because their salaries are not enough to cover their personal expenses and the debts incurred.

Faced with the pressure of debt, some people with low-cost educational loans file for bankruptcy. In 2019 alone, 32 percent of those who used this measure had student loan debt.

It is important to understand that filing for bankruptcy makes it possible to get rid of debts such as business credit, a vehicle loan, or your credit card account. But education debts will not be considered in bankruptcy proceedings, because they are not forgivable debts.

This means that you can go through the entire bankruptcy process, whether through Chapter 7, Chapter 13, or another type of bankruptcy, and your student loan will remain, even if other debts have been eliminated.

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However, there are some exceptions and extraordinary cases can be approved.

Is It Possible To Eliminate Student Loans With Bankruptcy?
It is technically possible to get your student loan exemption, although this is very rare.

To do this, you must go to the bankruptcy court and make a presentation of your case. The goal is to show that you are in an extraordinary and difficult financial situation that will make it impossible for you to repay your loan.

Therefore, you would be asking the court to include your education debt along with the rest of your debt when you file for bankruptcy.

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What Must Be Proven For Education Loan Forgiveness?
There are certain conditions that you need to demonstrate very well for your case to be considered, otherwise it will be denied, and this is generally the case with most petitions.

The three main things the court needs to look at are:

That you have tried to pay off your loans and putting in an enormous effort.
That if you pay those credits you will have financial problems in the foreseeable future, and that these difficulties will not disappear during the time established to repay the loan.
That your family will be seriously harmed by the loans, as you will not have enough money to maintain an acceptable standard of living.
The court will assess the situation and consider what is the minimum standard of living for the applicant and their family to live in a safe and healthy manner. For example, if the court determines that the applicant is financially limited by things that he simply wants and does not need, then the case will be denied.

Keep in mind that the goal is not to expose your family to poverty because of student debt. Other arguments to make could be medical issues, pandemics, and your employment situation.

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The importance of following the appropriate steps

The process of considering the case and filing for bankruptcy are two very different steps, which will then be linked if the former is approved.

Both procedures can be very complicated, so it is very important to understand exactly what, how and when you are requesting.

Missing a small part of the process could result in your order being rejected. It is not impossible to disable student loans, but it is a long process, and to move forward you must follow the steps in the order stipulated and show precisely why you should be waived.

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Talk to a Qualified Bankruptcy Attorney Today
This article is intended to be helpful and informative, but legal matters can be complicated and stressful. A qualified bankruptcy attorney can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact a local bankruptcy attorney to discuss your unique legal situation.

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