Bankruptcy is a great opportunity to get a fresh start on your finances, but it isn’t the right option for everyone. One of the best ways to determine if bankruptcy is going to help you repair your damaged finances is to consider the type of debt you have. Though bankruptcy allows you to discharge, or eliminate, many types of debt, some debts are non-dischargeable. Student loan debt is often one of these types of debt.
Despite student loan debt being one of the main reasons people face financial challenges, it is often not dischargeable in a bankruptcy. Under certain circumstances, you might be allowed to discharge your student loan debt. For instance, if you can prove you are facing undue hardship and your student loan debt is adding to this or you are unable to afford the payments because of hardship, there’s a chance you’ll be able to discharge the debt.
Proving Undue Hardship in Your Bankruptcy Case
In order to prove undue hardship, the bankruptcy court uses the Brunner test, named after the 1987 US Court of Appeals decision in the Brunner v. New York State Higher Education Services Corp. case. In order to qualify for an undue hardship disqualification of your student loan, you’ll need to prove:
• You are unable to maintain a minimal standard of living if forced to repay student loan debt
• Your current financial situation will likely continue throughout the repayment period
• You have made a good faith effort to repay the loan
Though the bankruptcy court uses the Brunner test as a guideline to determine whether or not you qualify for student loan discharge, different court systems interpret hardship differently. This is why it is so important to work with an experienced attorney who is able to make it clear to the court that you do qualify as a hardship case.
In order to prove your status, you’ll also need to file a separate petition with the court regarding your hardship claim. It’s important for an attorney to assess your case, determine if you are likely to qualify, and assist you with the paperwork to ensure all of your “ducks are in a row” and you’ll stand the best chance of qualifying for undue hardship.
You can view a detailed analysis of hardship here.
Managing Your Bankruptcy Case
There might also be additional defenses you can use in your bankruptcy case to help you deal with your student loan. Every case is different and only an experienced bankruptcy attorney will be able to help you determine the best path to pursue.
Student loan debt can cause serious financial strife and lead you down a path of financial ruin. If you are struggling to make student loan payments or other debts have made it difficult to repay your student loan, we can help. Contact the Law Offices of Robert M. Geller at 813.254.5696 to discuss your options and determine the best way to get your financial life back on track.