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Can you discharge student loan debt in bankruptcy?

Many people have taken out financial aid in order to pay for their continued education. Whether using these funds to pay for tuition at a trade school, college or grad school, these loans can quickly add up. Even if you find a decent-paying job after graduating, it can be difficult to meet your monthly payment obligations.

Unfortunately, for those who have student loan debt, bankruptcy is usually not an option to eliminate this debt. The bankruptcy laws do not allow for the discharge of these loans, except in the case of "undue hardship." In this post, we discuss what undue hardship means, and what this means for your situation.

Significant hurdle to overcome

In most cases, a bankruptcy petitioner who wishes to discharge student loans is going to have to demonstrate a serious obstacle that prevents repayment of the loans, and this is almost impossible to do. And this is more than just an inability to find a job - it means that they have some sort of physical impairment or injury that is going to make them unable to get the type of job that they need to pay their debts.

The vast majority of people who try to show undue hardship are unsuccessful with their claims. Recently some courts have started revisiting what undue hardship means in bankruptcy cases. There has been a split in how the court is defining the word "undue." Those who stick to the traditional view often define undue as unjust, meaning the judge looks at all of the facts and decides whether or not the borrower should be required to pay the loan.

Some judges have started defining undue as "excessive." This means they look at the burden that would be placed upon the borrower if the borrower was forced to pay back the money he or she owes. This is a much lower standard for those looking to discharge the loans.

While this could make the process easier, it is still not that widespread. The courts are, for the most part, using the much tougher test to judge undue hardship. You will need an experienced bankruptcy attorney to help you find the right solutions to your financial struggles.

Learn more about your options

Even if your situation seems hopeless, there are still things that can be done to help you overcome your financial challenges. Speak to an attorney to learn more about the options that are going to be available to you.

Your attorney can help you decide the best approach to take. If bankruptcy is the right choice for you, your lawyer will be able to prepare your paperwork and make sure your petition is complete. This can help you move through the process without unnecessary delays, which will allow you to regain control over your financial future.

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