How To Handle Student Loan Debt In Bankruptcy
One of the largest growing areas of debt in the United States is student loan debt. Most kids get out of college with at least $20,000.00 in debt. Carrying this type of debt load when entering the work force makes it hard to repay what is owed, especially with starting salaries dropping and the job market tightening. One option for those with more debt than they can pay is to seek the relief offered by filing bankruptcy. If you are considering this as an option, it is important to know the benefits. And, if eliminating your student loan debt is your goal, you should know that doing so is a tricky task.
Most student loan debt is not forgiven when bankruptcy is filed. The test used to determine whether you can be made to repay student loans is difficult, and not many debtors are able to meet the criteria. The legal standard applied by most courts requires a debtor to show the following:
- Repayment of any portion of the debt will impose an undue hardship on not only the debtor, but also any dependents of the debtor.
- A good faith effort at repayment has been made.
- That your financial situation is not likely to change for the better for most of the period of time that repayment is expected.
These elements are unique to the individual seeking to have their student debt included in their bankruptcy, and the evidence you use will depend on your circumstances. A good way to look at this test is to view your circumstances as a whole, and show that your living standard would be less than “minimal” if you were made to repay your loans. This might include taking a look at your income and expenses and showing you do not have enough salary coming in to even pay for modest necessities, and the Court may even consider the income your spouse brings in when making this determination. This is because your spouse is just as responsible for the care and well-being of your dependents as you are, and if they can be provided for modestly when looking at the entire household income, you may not quali9fy to have student loan debt forgiven. Before you make the decision to try and discharge your student loan debt, call our office and speak with a qualified bankruptcy and debt management attorney. We will review the facts of your case, and give you advice as to your options.
If you have questions about student loans, contact us at www.DsouzaLegalGroup.com. We will help by coming up with solutions that work for you.