A question that often comes up when we speak with clients is how to tackle student loans when it comes to bankruptcy. Oftentimes, a young family is swimming in debt, a significant amount of which is in the form of student loans.
A recent article in on CNN Money brought to light just how dire the student loan situation has become. According to the article, the average student loan debt of a person who graduated in May 2013 was $35,200. For many, this debt is manageable until they get married and now have two combined student loan payments, plus a mortgage, plus medical bills, etc.
Student loans have their own set of requirements when it comes to bankruptcy. Loan companies are not going to easily forgive the debt of student loans. Below, you will find a few things to consider when trying to recover from the mounting debt of college education.
- Student loans are NOT dischargeable through bankruptcy
When applying for bankruptcy, you will not be released of your liability to repay the debts that you owe for your education. Creditors can still come after you to receive payment on this debt. However, all hope is not lost!
- Student loans can be proven to cause “undue hardship”
Like in a recent case of our for more than $400,000, if you can prove that to pay back your student loans would cause you “undue hardship” you can be waived of liability. This is where the law gets a little tricky when dealing with student loans as this exception must be proven. To prove that you are experiencing undue hardship you must:
- Prove that repaying your loans means you are living below the minimal standard of living;
- Prove that you have a disability that is outside of your control that will keep you from repaying this debt;
- Prove you have a solid track record of paying as much as you can, even at the cost of your own well-being.
If you need help in dealing with student loan debt in Kansas or Missouri, please contact us. It can be very difficult to include student loan debt in bankruptcy filings but it is not impossible. We are experienced in bankruptcy law and will work one-on-one with you to see if you qualify for any released liability of student loans.