Can I Discharge My Student Loan Debt?
When filing for bankruptcy, many debts can be discharged; however, some debts can be difficult to discharge. In particular, student loan debt can be troublesome in terms of dischargeability.
The best way to determine if you can rid yourself of student loan debt through the bankruptcy process is by talking with a competent bankruptcy attorney who is equipped to analyze your specific situation.
The Undue Hardship Test
Student loans may be discharged (and/or partially discharged) if it can be proven that the loans create an “undue hardship” on you and your dependents. This is called the Brunner test (Brunner v. New York State Higher Education Services Corp.).
The following three-pronged test must be proven:
1. you cannot maintain a “minimal” standard of living for yourself and your dependents if forced to repay the loans;
2. your financial situation/standard of living is not likely to change; and
3. you have tried your best to repay the loans.
The Brunner court said that dischargeability of student loans should be based upon “a certainty of hopelessness, not merely a present inability to fulfill the financial commitment.” As shown, doing away with student loan debt is possible, but the above test can be difficult to prove.
How Can I Use Bankruptcy to Discharge Student Loan Debt?
The best approach is to discuss your personal situation with your bankruptcy attorney in order to determine whether you can meet the undue hardship standard. Some assume that student loans can be instantly discharged by filing bankruptcy; however, it isn’t that simple: you will need to file a petition in order to obtain an assessment of your individual situation.
If bankruptcy is not the best option for you, there are several other options available that address student loan repayment. These options, however, are complex and subject to frequent change.
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