Filing Bankruptcy on Student Loans: What To Do?

It’s a common misconception that it’s impossible to discharge student loans by declaring bankruptcy. While it’s usually considered a nondischargeable debt, it’s possible to discharge student loan debt in certain situations. Read on to learn how to file bankruptcy on student loans.

1. Get a bankruptcy attorney.

While bankruptcy laws don’t require you to have legal representation, it’s best to hire a bankruptcy attorney when you’re filing bankruptcy on student loans. The bankruptcy process to eliminate your student loans is much more complex than a regular bankruptcy filing, so having legal assistance in navigating the bankruptcy proceeding makes the process smoother while increasing your likelihood of getting a bankruptcy discharge.

If you’re considering bankruptcy to get your student loans discharged, contact Farmer & Wright, PLLC to schedule a consultation with experienced bankruptcy attorneys.

2. File for bankruptcy.

Student LoansYou need to file a bankruptcy case to wipe out your student loans. A bankruptcy filing can give you the debt relief you’re looking for. After filing your petition to the court, the automatic stay takes effect and prevents creditors and debt collectors from collecting on your loans.

There are two types of bankruptcy you can file for: Chapter 7 or Chapter 13. Consult with your bankruptcy lawyer to determine which type of consumer bankruptcy is right for you. If you have filed for bankruptcy in the past, you can reopen the case and take legal action to have your student loans wiped out.

3. Start the adversary proceeding.

You’ll need to file an additional lawsuit called the adversary proceeding to have your student loans eliminated in bankruptcy. Your bankruptcy attorney files a written complaint to the bankruptcy court. You’ll need to prove undue hardship, and a judge decides whether you’ll be given full, partial, or no discharge.

4. Prove undue hardship.

To have your student loans wiped in bankruptcy, you have to prove that these cause undue hardship. The bankruptcy code doesn’t define undue hardship, so its interpretation is up to the bankruptcy courts.

The Brunner test is commonly used to determine whether your student loan meets the undue hardship standard. To qualify, you’ll need to meet all three criteria of the Brunner test.

  • Making monthly payments to repay your student loans prevents you from meeting the minimal standard of living. Typically, this means your monthly income is barely enough to cover your living expenses, and that you’ve exerted effort to increase your income without success.
  • Your circumstances suggest that your financial situation likely won’t improve for a significant part of your loan period. Having a physical or mental disability, or having maximized the income potential in your field, may help you meet these criteria.
  • You tried to repay your unpaid loans in good faith. This means that you took efforts to pay off your loans, such as by negotiating a payment plan with your creditor or cutting expenses to pay your loans.

Getting your student loans discharged may not be an easy feat, but it isn’t impossible either. At Farmer & Wright, PLLC, we can discuss your debt relief options with you to determine filing bankruptcy on student loans is the right choice for you, and provide legal assistance throughout the bankruptcy process. Contact us today to schedule a consultation with our reliable bankruptcy attorneys.

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