The only silver lining to student loans is the fact that you are not the only person dealing with them. Hundreds of thousands of new students each year are unable to afford tuition and turn to both government and private lenders for student loans. Over the course of pursuing higher education, the loans pile up. Shortly after graduating, the student loan bills start rolling in, leaving many people in a financial hole when they find out they can barely afford to pay those bills.
Is bankruptcy the best way to eliminate student loans? The commonly accepted answer is no, because student loans do not get discharged in bankruptcy. In truth, student loans can be discharged if certain requirements are met.
You Must Prove Undue Hardship
In order to eliminate your student loans when filing for bankruptcy, you must prove that paying them would cause you undue hardship. You must also show that you cannot make payments now and in the foreseeable future. Many courts utilize the Brunner test to determine if you can discharge your student loans because of undue hardship. For the Brunner test, you must prove the following:
- Based on your current income and expenses, you will be unable to maintain a minimum standard of living for yourself (and your dependents if you have them) if your repay your loans
- This current situation will likely carry one for the majority of your repayment period (ie. a severe or permanent disability leaving you unable to work for an income)
- A good faith effort to repay your student loans was exemplified in the past
These conditions are difficult for many to meet, leaving them stuck with their student loans. But that does not mean filing for bankruptcy will not help. In fact, filing for bankruptcy might make managing your student loans easier. If you qualify for Chapter 7, any debt like credit cards, personal loans, and medical bills could be wiped out. This can free up money to put towards your student loan payment. Under Chapter 13, your student loan payments could be reduced to something more manageable during your three to five year repayment plan period. At the end, when other debt gets discharged, it can free up more money to put toward your student loan payments as well.
Skilled Bankruptcy Attorney in NJ Can Assist You
There is no better time than now to get your finances in order. If you are dealing with student loans and are weighing your financial options, consider hiring a bankruptcy attorney. When looking for a skilled and experienced attorney in New Jersey, look no further than the Law Office of Joel R. Spivack.
Not only will your bankruptcy needs be addressed, you can also learn about the bankruptcy process and alternatives to bankruptcy. Whatever is best for your specific situation will be worked toward. Contact the Law Office of Joel R. Spivack by filling out the online contact form today.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.