Some can discharge student loan debt through bankruptcy | Milwaukee, WI

BREAKING NEWS:   U.S. Department of Justice announces new rules to discharging federal student loans. Find out if you qualify TODAY!

Milwaukee 414-250-7880         Madison 608-465-4594         Green Bay 920-626-3125

brand-logo_new
Serving all of Wisconsin
Toll-free 866-906-5634  Milwaukee  414-250-7880     Madison  608-465-4594     Green Bay 920-626-3125

Our 3 Step Process

Step 1:
Get Out Of Debt

Step 2:
Clean Up Your Credit

Step 3:
Build Your Score

Home 9 Firm News 9 Some can discharge student loan debt through bankruptcy

Some can discharge student loan debt through bankruptcy

by | Nov 9, 2020 | Firm News

There are an estimated 43 million people in the United States who carry student loan debt. Many took out the loans believing that a good job after graduation would cover the tens of thousands of dollars they borrowed. Unfortunately, things often did not go as planned for the borrowers. While politicians and regulators search for a solution, many in debt are part of “the student loan crisis” where the total debt in 2020 is about $1.6 trillion.

Student loans traditionally were thought to be one of the few loans that could not be wiped away in bankruptcy. This is a misconception, but it is still harder to discharge than most other kinds of debts. For it to happen, the borrower will need to prove that repaying the debt would put undue hardship upon them and their family.

What is undue hardship?

Also referred to as the Brunner Test, undue hardship examples include:

  • The borrower made good faith efforts to pay off loans before filing bankruptcy.
  • There is evidence that the borrower would not be able to repay the debt over the loan repayment period.
  • There is evidence that repaying the loan would force the borrower and their family to live below the minimum standard of living.

If the court agrees with the borrower and their attorney, they can determine that:

  • The remaining amount of the loan is discharged, and all collection activities stop.
  • The borrower must still repay a portion of their loan.
  • The borrower repays the full amount with different terms, such as at a lower interest rate or a stay for a period that enables them to get back on firmer financial footing.

Some cannot wait

While policymakers occasionally pick up the issue of student debt forgiveness, borrowers may be better off trying to discharge the debt as part of their Chapter 7 or Chapter 13 Bankruptcy filing. Those considering bankruptcy can talk to a bankruptcy attorney about all their debts, including student loans. Then they can come up with a workable plan for moving forward.

Book-image-Bankruptcy

Complete this form to receive your FREE copy of Attorney Miller’s book, Back On Track – How Bankruptcy can Revert the Financial Impact of COVID-19. Order today to begin your personal journey toward true financial freedom.

Sidebar (Book Request)

OR