As we have reported in our blog over the last couple of months, student loans are difficult to discharge via bankruptcy—although the idea that it cannot be done is simply untrue.
To discharge student loans through bankruptcy, a person must show an extreme financial hardship. However, as some financial writers have pointed out, many people who may be able to show this hardship are simply not including the loans in their bankruptcy filings.
Recently, US News and World Report said that less than 1 percent of people with student loans attempt to include them in their bankruptcy proceedings. Additionally, the news outlet reported that of the debtors who did include student loans in their bankruptcy filings, 40 percent ended up with a portion or all of their loans discharged.
US News and World Report said that people should talk to a bankruptcy attorney about their student loans—saying that many courts use the Brunner test to determine if an education debt would continue to cause a debtor undue financial hardship.
The Brunner test reportedly weighs whether a debtor could sustain a minimum standard of living, and whether his or her financial future is likely to change. Additionally, it requires that a debtor made a good-faith effort to repay the loans in the past, prior to bankruptcy.
Currently, student loan debt levels sit at more than $1.2 trillion, surpassing credit card debt. This has truly become a national financial crisis, and it is our hope that our legislators will do more to help those who are struggling.
How Can I Reduce or Eliminate My Student Loans?
Remember, if you have substantial student loan debt, you should speak to our Maryland and Washington DC bankruptcy attorney. Keep in mind, when you file for Chapter 7 bankruptcy, you can discharge debts like credit card debt and medical bills, which can help make student loan payments easier to pay.
Additionally, there are multiple repayment options available to you, such as mediation with a lender and/or income based repayments. You should not have to struggle to sustain a minimal standard of living because of student loan debt. Our attorney can help you figure out the best way to eliminate or repay this debt based on your financial situation.
Law Firm of Kevin D. Judd – Maryland and Washington DC bankruptcy attorney
Judd’s Judgment: The standard repayment schedule for a federal student loan is 10 years, although many people work out longer payment periods.