' Can Student Loan Debt Be Discharged? - Law Offices of Robert M. Geller
CALL NOW!
FREE PHONE/VIRTUAL CONSULTATION

Can Student Loan Consolidation Help You Avoid Bankruptcy?

One of the most common questions people have when they consider bankruptcy is “can student debt be discharged in bankruptcy?” In most cases, the answer is “no.” However, there are other things you can do to improve your financial situation when you have significant student loan debt and you’re considering bankruptcy.

Here’s what you need to know.

Student loans are not dischargeable in bankruptcy, with one exception. If you’re able to establish undue hardship by filing an adversary proceeding in your bankruptcy case, the court could provide relief from your student loan obligations.

Doing so is challenging and people filing for bankruptcy rarely meet the standard for undue hardship. To do so, you must show that you’re unable to meet the minimum standard of living for you and any of your dependents due to your student loan.

Most bankruptcy judges require filers to demonstrate three things to qualify for undue hardship:

  • Payment obligations prevent you from maintaining a minimal standard of living
  • This status is likely to continue for a significant portion of the loan’s repayment period
  • You’ve made good faith efforts to repay your student loan

To show that they meet the standard of undue hardship, borrowers must initiate an “adversary proceeding.”

This is a lawsuit within the bankruptcy case brought against the borrower’s student loan lenders. They must show evidence that they meet the undue hardship standard and lenders present evidence to the contrary. It’s a lengthy and sometimes complicated procedure and very few people filing for bankruptcy meet the standards of undue hardship. In most cases, to do so, you’d need other extenuating circumstances, such as a disability, to qualify.

To learn more about an adversary proceeding and what it includes, check out this information from Nolo’s encyclopedia.

If I Can’t Discharge Student Debt, What Can I Do?

Now that you know the answer to “can student debt be discharged in bankruptcy?” you can look for other ways to resolve your financial situation.

One of the most common ways of dealing with student loan debt is debt consolidation.

For those filing for Chapter 13 bankruptcy, consolidation is one of the best ways to move forward. You won’t discharge your loan, but you’ll consolidate it into your debt repayment plan under bankruptcy.

This also allows you to challenge the amount owed. In some cases, the bankruptcy court reduces the amount owed by the borrower after evaluating the loan and determining the lender charged improper interest or penalties.

Consolidation might still be an option even if you aren’t filing for Chapter 13.

Many lenders will assist you in consolidating your loans. This often results in a decrease in your interest rate, so you’ll save over time repaying your loan. Keep in mind, federal loans typically have lower interest rates. It’s important to weigh the pros and cons of private consolidation and in most cases, it won’t be beneficial unless you’re consolidating private loans.

Is Deferment a Better Option?

Deferment is another option to help you deal with student loan debt. If you are currently facing financial hardship, whether or not you pursue bankruptcy, you can request a deferment. This means you won’t have to pay your monthly payment for a period. Deferment is usually available for people not in default who are dealing with job loss or a change in income.

Finally, you might qualify to have your student loans canceled or forgiven if you meet the requirements to do so. People with public service or jobs in education are eligible.

The bottom line is you have options if student loan debt is a problem. When you’re dealing with credit card debt or medical debt or other types of debt, bankruptcy is often the best option. But bankruptcy can only do so much for student loan debt. The good news is you aren’t out-of-luck your student debt is one of your concerns.

If you’d like to know more or you have questions about how loan consolidation can help you avoid bankruptcy, contact the Law Office of Robert M. Geller at 813-254-5696 to schedule a free consultation.

Archive

Video Testimonials

Tampa Bankruptcy Law Blog

How is Marital Debt Divided?

Filing for bankruptcy is a complex process and becomes even more complicated when marital debt is involved. Marital debt refers...
Read More

What is Skip Tracing in Debt Collection?

When you lend money to someone whether it is for personal or business reasons, it’s especially difficult when they don’t...
Read More

What Happens at the End of a Chapter 13 Bankruptcy?

Dealing with bankruptcy is never easy. However, if you find yourself in a situation where you need to file for...
Read More

Can My Wages Be Garnished for My Spouse’s Debt?

Marriage is a partnership that often extends to financial issues, including debt. Unfortunately, not all spouses see eye to eye...
Read More

What Happens When You Get a Court Summons for Debt?

Getting a court summons for debt can be an overwhelming and frightening experience, but it doesn't have to be. Despite...
Read More

Can a Debt Collector Serve You Papers at Work?

Debt can feel overwhelming and stressful, especially if you have creditors calling you at work. Many people wonder whether this...
Read More

What to Do If a Debt Collector Threatens You?

Dealing with debt collectors is stressful and challenging. Even under the best of circumstances, contact from a debt collector is...
Read More

What You Need to Know about Updates to Student Loan Bankruptcy Discharge Laws

Are you struggling to make ends meet because of hefty student loan debt? The good news is that you may...
Read More

What is Considered Harassment from a Debt Collector?

Being in debt is never easy, but it’s especially devastating when you're being harassed by debt collectors. Of course, debt...
Read More

What to Do When You are Drowning in Debt?

Living with overwhelming debt is a distressing experience. It can feel like you are in an endless cycle of bills,...
Read More

Bankruptcy

For The Next 5 Days GET A FREE BOOK About Bankruptcy

Learn More

Infographics

We are A Debt Relief Agency.
We help people file for bankruptcy under the Bankruptcy Code

Pay Online Bankruptcy Courses Newsletter Subscription

Call For A Free Initial Consultation

813.254.5696

Tampa Office

Law Offices of Robert M. Geller, P.A.
807 West Azeele Street
Tampa, FL 33606
T: (813) 254-5696
T: (800) 853-7549
F: (813) 253-3405

Map And Directions

St. Petersburg Office

Law Offices of Robert M. Geller, P.A.
125 5th Street South
(Wells Fargo Financial Center)
2nd Floor, Suite G
St. Petersburg, FL 33701
T: (727) 532-3939

Map And Directions

Pasco Office

23526 State Road 54
Lutz, FL 33559
T: (813) 336-2320

Map And Directions