Student loan debt is one of the most common reasons people struggle financially. Whether they took on more debt than they could ever pay off based on their projected earnings or they are struggling to find employment after graduating when student loan debt comes due, many people are unable to meet their monthly payment obligations. And despite bankruptcy being a tool that can help someone out of financial straits, in most circumstances, it will not help with student loan debt.
However, There Are Exceptions.
Bankruptcy courts use a test to determine a person’s financial means. If it is determined you have undue financial hardship, student loan debt might be discharged in your bankruptcy. If you are physically disabled, there is a chance your student loan debt will not be treated the same as someone not facing similar struggles.
Debtors suffering from physical or mental disabilities struggling to repay student loan debt might receive a “total and permanent disability (TPD) discharge.” To do so, you must prove you qualify, which can be a challenge, but if the court determines the TPD exception pertains to you, your student loan debt will no longer be the burden it is currently.
Three things that can qualify a debt for a TPD discharge include:
Veterans who are unemployed because of a disability that occurred during service might be allowed to discharge student loans. You’ll need to show documentation from the Department of Veterans’ Affairs to confirm your circumstances.
For more information on veterans and student loans, check out this link from the Consumer Financial Protection Bureauthe Consumer Financial Protection Bureau.
Recipient of Social Security Insurance or Disability Benefits
Those receiving SSDI or SSI benefits could be eligible to discharge student loan debt. Again proof is needed, this time in the form of your Social Security Administration award notice concerning your disability.
Statement from a Physician
If your physician provides a written testimony confirming you are unable to work because of a disability, it could qualify you for a student loan debt discharge. In most cases, your doctor must confirm your disability is expected to result in death, and your disability has been consistently present for more than 60 days and is expected to last for more than 60 days.
Discharge Only Applies to Certain Student Loans
Unfortunately, even with the possibility you’ll qualify for a discharge based on your medical situation, some student loans do not permit discharge. Essentially in these cases, it isn’t your circumstances that disqualify you, it’s the loan itself. For most, the qualifications for a TPD discharge do not apply to private student loans.
It’s important to get a clear understanding whether or not your student loan could qualify for a discharge, as this can help you make decisions about your overall financial situation. We can help you make this determination and move forward with your bankruptcy plans. We can also offer options for resolving your student loan debt through other means.
For more information or to schedule a bankruptcy lawyer consultation, contact the Law Offices of Robert M. Geller at 813.254.5696.