When Student Loans Can be Discharged

What You Need to Know About Bankruptcy and Student Loans

Many folks have taken out student loans in hopes to get a degree for a profitable career. However getting the job you want doesn’t always happen. This also means that you should be cautious upon graduation. The repayment is usually expected to begin within 9 months of graduating from college. However, if you are unable to find a job it could be tough to make payments. While filing a bankruptcy can help you with your debts, this will not eliminate your student loans.

There is only one time in which a student loan can be discharged. This is when you are only making enough to pay for “minimal living expenses” for you and your family. In this case the court requires evidence in all aspects that this is truly the case for you. This is extreme and means that you cannot own a cell phone, cable TV, or even have pets which are considered a luxury item. Additionally, you need proof that your finances are not likely to improve. This is a rare occurrence.

This type of filing will also require an additional petition in order to be done properly and provide the proper evidence. This is what is known as an adversary proceeding, and it’s tough to appeal to the court that you are in this difficult position financially.

Chapter 13 and Student Loans

Should you file a Chapter 13 bankruptcy which means a repayment plan, you’ll be able to appeal to the lender that holds the student loan. This means that they cannot demand the entire amount at once if you are at the maximum number of months behind. This generally means that you are at least 9 months behind. This is generally when a student loan company demands payment in full. In a Chapter 13 the Trustee divides your payments up equally among your creditors to make repayment feasible.

The law regarding student loans and how you file for bankruptcy can be tricky and complicated. If you have questions regarding your unique case and how it should be filed, you’ll want to contact a bankruptcy lawyer today.

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