Stop me if you have heard this one before: “Student loans are the only kind of debt that you must always continue to pay, even if you declare bankruptcy.” Odds are, you have heard it before. Heck, it has been at the center of some high profile presidential races recently. As with any exceptionally strong statements that rely on words like “only” or “always,” the cautious observer will remain healthily skeptical until all the facts are in. While it may be true that discharging student debt is a difficult proposition when declaring Chapter 7 or 13, there are other scenarios when it is certainly possible to wipe even those debts away. Keep reading this blog to learn more about your options and which steps to follow moving forward.
Students who take out loans to attend institutions of high-education, but do not complete their degrees, are at the highest risk of default. They include those who:
- Attended for-profit learning institutions, often based online, that care more about getting bankrolled student loan money from the government than the learning outcomes of their students.
- Experienced some kind of traumatic life event while attending school and never had the chance to complete their degree.
There are, of course, other circumstances that may contribute to a debtor defaulting, but the inability to complete one’s degree remains the most telling leading indicator.
Who Qualifies for Forgiveness?
Notwithstanding certain barriers to forgiveness in some bankruptcy filings, there is a way for some individuals to wipe away their debts via the courts. In order to qualify for such forgiveness, individuals must prove that repaying those loan(s) would result in undue hardship for them or their dependents. While this is the central standard, there are other factors involved, such as whether the debtor has attempted to:
- Obtain gainful employment which would allow that individual to pay of his or her debts.
- Negotiate better terms with the lender, including deferred payments or a tailored payment plan.
- Live within his or her means.
- Made a “good faith” effort to repay his or her loans. (This does not necessarily involve actually making payments. Instead, it could involve any of the steps above in lieu of, or in addition to, keeping up with monthly balances.
If an individual can prove that he or she has honestly sought to create the conditions necessary to pay back his or her loans, but would be unable to provide a decent living standard while doing so, then that person has a decent opportunity to qualify for loan forgiveness.
If you have student debts that pose an undue hardship, you may be able to discharge your obligations through a bankruptcy motion. The above information will have provided you with a decent overview of the factors involved in the process. But, there is no substitute for employing the services of a knowledgeable, experienced, and aggressive lawyer who will fight on your behalf. If you are ready to begin your process to financial freedom, then contact the legal team at Adam Law Group today. Working with a dedicated legal team could lead to years of debt-free living. Call today to learn more.