Discharging Student Loans in Bankruptcy
Drowning in Student Loan Debt? Learn More About Your Options.
Bankruptcy can be complex, as there are many phases to it. At Owenby Law,
P.A., most of our clients have a basic understanding of how
bankruptcy works, but they are unaware of how certain types of debt obligations and
income are treated under federal bankruptcy law—including student
loan debt. While almost all income can be counted in a
Chapter 13 bankruptcy payment plan, and most types of debt are dischargeable under either Chapter
7 or Chapter 13, there are some notable exceptions. For example, student
loans debt must be evaluated on an individual basis.
To schedule your
free initial consultation, call Owenby Law, P.A. at (904) 770-3141.
How Student Loan Debt Is Treated in Chapter 7 and Chapter 13
Student loans are not usually dischargeable in
Chapter 7 bankruptcy, but there is an exception. If you can show by a preponderance of evidence
that the repayment of your student loans will cause an undue hardship
for you and your family, the bankruptcy court may allow the debt to be
forgiven. To demonstrate undue hardship, your Jacksonville bankruptcy
attorney must be able to point to an event or series of events that placed
you in an untenable position with regard to this debt. Under Chapter 13,
you are sometimes allowed to reduce your payments through an extension.
Determining If You Qualify for the "Undue Hardship Exception"
Many courts will use the Brunner test to evaluate undue hardship, which looks at:
Poverty – Are you unable to maintain a minimal standard of living based
on your current income?
Persistence – Would your hardship persist for a significant part of the repayment period?
Good faith – Have you made a good faith effort to repay your student loan debt?
Contact Owenby Law, P.A. to Get Started with a Free Case Evaluation
If you are struggling to repay your student loan debt, we encourage you
to explore your options with a Jacksonville bankruptcy lawyer at Owenby
Law, P.A. We give debtors a chance to start over with a clean slate. If
you are ready to take the first step toward a fresh start, please contact
our firm today. During a free initial consultation, our attorneys can
evaluate your financial situation and advise you on how to proceed with