Can You Claim Bankruptcy On Student Loans

April 26, 2021

To discharge student loans you have to file an adversary proceeding in bankruptcy court arguing that your loans are an undue hardship. Theres no automatic student loan debt discharge.

Bankruptcy Discharge What Is It

Bankruptcy makes more sense in instances of student loan default especially if you have defaulted on private student loans and your lender is suing you in an attempt to garnish your wages.

Can you claim bankruptcy on student loans. You actually can get student loans. This is true for medical debt credit card bills and even student loans although the type of bankruptcy you should pursue Chapter 7 or Chapter 13 depends on many factors such as your ability to. Over the years a myth has taken hold that you cant get student debt reduced or wiped out through bankruptcy.

Its just a little tricky. But many bankruptcy judges. You may have heard that student loans cannot be discharged in bankruptcy.

Student loans are difficult but not impossible to discharge in bankruptcy. If you want to discharge a student loan in bankruptcy you must bring a separate action within your bankruptcy case called a complaint to determine dischargeability and demonstrate to the court that repaying your student loan would cause undue hardship for you and your dependents. Most debtors wont be able to discharge wipe out student loan debt in Chapter 7 or Chapter 13 bankruptcy.

Its not that you cant declare bankruptcy on student loans. Unlike other types of consumer debt such as credit card and mortgages student loans traditionally cannot be discharged in bankruptcy. To have your student loans considered for discharge you can file a complaint to determine dischargeability.

That statement oversimplifies the truth. And finally you may want to consult with an attorney who handles bankruptcy cases and who has experience in student loans specifically because owing 150000 in student loan debt and having a dependent may make you eligible for passing one of the undue hardship tests which would allow you to discharge the debt completely via. While some federal loans do require that you have good credit which may take a little while to build after filing bankruptcy others dont depend on creditworthiness.

Unfortunately undue hardship is not a. To successfully have your student loans discharged in bankruptcy you will need to prove that repaying them would cause an undue hardship. Court of Appeals for the 10th Circuit affirmed a lower bankruptcy courts determination that a borrowers private student loan debt could be discharged in bankruptcy.

Other debts including your mortgage and auto loans are dischargeable through bankruptcy filings but student loans can only be discharged if the. Filing bankruptcy does not prevent you from getting federal student loans or other types of federal financial aid. However if you can prove that repaying your student loans would cause an undue hardship to you you can get rid of your student loans in bankruptcy.

To discharge your student loan debt through bankruptcy you have to prove that you cant pay back your student loans without it having an extremely negative impact on. Its that student loan debt unlike your credit card debt is not automatically dischargeable. Federal Student Aid.

For other people bankruptcy may be the only next option. Navient the US. Under Chapter 7 bankruptcy your student loans are not automatically discharged.

In 2005 Congress passed and President George W. Filing bankruptcy on student loans is possible but youll have to go through a difficult process to do so. Most people believe that student loans cannot be discharged or forgiven when they declare bankruptcy.

To do so you must show that payment of the debt will impose an undue hardship on you and your dependents Courts use different tests to evaluate whether a particular borrower has shown an undue hardship. Contrary to popular belief however it is can be done.

How To File Bankruptcy For Student Loans Nerdwallet

Filing For Bankruptcy For Student Loans What You Need To Know Bankrate