If you are drowning in student loan debt, you are not alone! Our country is facing an overwhelming amount of student loan debt. Most people are aware that it is difficult to discharge student loan debt in bankruptcy. It is important to understand that it may be difficult, but not impossible!
According to Section 523(a)(8) of the Bankruptcy Code, a debtor must be able to prove an “undue hardship” on the debtor or his/her dependents will result from repaying the student loans. There is no clear definition of what constitutes an undue hardship, but the standard is strictly enforced by the bankruptcy courts. In general, an undue hardship means that it is not reasonable to expect the debtor to ever have the ability to repay the student loan debt. Most courts believe that there should be a certain level of hardship experienced by the debtor when repaying the debt. As a result, discharge of student loan debt usually only occurs in extreme cases.
The good news is that the law does not set a deadline for when you must seek to discharge your student loans in bankruptcy. Thus, if your financial situation takes a drastic turn for the worse in the future, you can still seek to discharge your student loans.
Another piece of good news comes from the U.S. 9th Circuit Court of Appeals. In the case before the court, Michael Hedlund was allowed to discharge $58,000 of the $85,000 he owes in student loan debt. The reason this case is helpful to many individuals is that Hedlund was a middle-wage earner, not somebody who was experiencing extreme poverty. Thus, the ruling is a small indication that some bankruptcy courts may be lifting the extreme requirement of the undue hardship standard.
If you are interested in learning whether you student loans could be discharged in bankruptcy, contact Diane Anderson. Even if you do not meet the undue hardship standard, eliminating the other forms of debt in your life could significantly improve your financial situation and make your student loans more affordable.
Diane Anderson understands that the law can be difficult to navigate. Ms. Anderson offers legal advice in plain English, while providing a compassionate and caring environment for her clients. While it may seem scary, she believes that the law does not have to be something to fear, but instead something you can use to empower yourself to build a better, stronger future for you and your family. Contact us today to schedule a comprehensive consultation.