Before considering bankruptcy, explore available repayment options. Federal student loans offer income-driven repayment (IDR) plans that adjust your monthly payment based on your income. These plans can lower payments and may include loan forgiveness after a set period, typically 20 to 25 years.
If your financial struggles are temporary, consider requesting a deferment or forbearance. These options pause payments for a specific time, giving you a chance to stabilize your finances. However, interest may continue to accrue, increasing the overall cost of your loan.
Many people believe student loans can never be discharged in bankruptcy. While it’s challenging, it’s not impossible. Discharging student loans requires proving that repayment would cause undue hardship—a high legal standard.
Courts often evaluate undue hardship using the Brunner Test. This test examines whether:
Meeting these criteria can be difficult, but not unattainable. Working with an experienced bankruptcy attorney can improve your chances of success.
Even if your student loans aren’t discharged, filing for bankruptcy can provide significant relief. Bankruptcy creates an automatic stay, which temporarily halts collection efforts, including wage garnishments and lawsuits related to student loans.
Chapter 13 bankruptcy may offer additional help. It allows you to restructure your debts, including student loans, into a manageable repayment plan. While this doesn’t eliminate the loans, it can buy time and ease financial pressure.
Additionally, bankruptcy can discharge other debts, such as credit card balances, medical bills, or personal loans. Reducing or eliminating these obligations frees up money to focus on your student loans.
Bankruptcy isn’t the right solution for everyone. If your primary debt is student loans and you don’t meet the undue hardship standard, bankruptcy may not provide the relief you need.
However, if you’re overwhelmed by multiple types of debt and need a fresh start, bankruptcy could be the right choice. Speaking with a qualified attorney can help you understand whether bankruptcy is the best option for your situation.
Student loan debt doesn’t have to dictate your future. While managing these payments can be challenging, there are solutions. Bankruptcy offers tools to relieve financial stress and create a path forward, even if your loans can’t be fully discharged.
If you’re struggling to afford your student loan payments, contact the Geller Law Firm today. Their team can help you explore your options, including how bankruptcy might fit into your financial strategy. Take control of your situation and start building a brighter financial future.
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