Filing for bankruptcy comes with many benefits for those facing a debt load that they’re unlikely to overcome without assistance. There are certain kinds of debt, however, that generally can’t be included in bankruptcy filings, and while student loans used to fall into this category, this has changed somewhat. To learn more about whether or not you’re a good candidate for bankruptcy and what it could mean for you. Seek the skilled legal guidance of an experienced South Carolina bankruptcy attorney.
When Student Loans Can Be Discharged
It is possible, in some situations, to discharge – or erase – student loans through bankruptcy, but you should know that it makes this already legally complex matter more so. If your student loan debt is overwhelming you and interfering with your ability to cover basic expenses like your food, clothing, and shelter, you may be eligible to discharge this debt through bankruptcy, and an esteemed bankruptcy attorney can help.
Filing an Adversary Proceeding
To discharge your student loans, you’ll have to take an additional step in the filing process. This involves filing an adversary proceeding, which is designed to demonstrate that repaying your student loans would lead to undue hardship. This term, however, isn’t directly defined, and the matter is left to the court’s discretion.
Recent Guidance
Fortunately, more in-depth guidance was issued by the federal government in 2022, and it provides more transparent standards for discharging student loans in bankruptcy. The process focuses on each of the following:
- The borrower’s past financial circumstances
- The borrower’s current financial circumstances
- The borrower’s predicted future financial circumstances
After this information is reviewed, data from the Education Department is tapped, and the borrower completes a comprehensive form that allows the government to more accurately assess their request for discharge.
The idea behind this guidance is to offer a better, fairer, and clearer process for borrowers facing bankruptcy.
Assessing Undue Hardship
While courts use different tests for determining whether an individual is experiencing undue hardship, the most common approach is the Brunner Test, which includes the following criteria:
- You can’t maintain a minimum standard of living for yourself – or for you and your dependents if you have them – while also covering your student loans.
- Your financial situation isn’t likely to change for the majority of your student loan repayment period.
- To date, you’ve made good-faith efforts to repay your student loans.
Turn to an Experienced South Carolina Bankruptcy Attorney for the Help You Need
In the past, it was exceptionally difficult to discharge a student loan in a bankruptcy filing, but recent guidance from the federal government seeks to make the process less ambiguous and fairer for all. The formidable South Carolina bankruptcy attorneys at Reed Law Firm are well-positioned to help you discharge all the debt you’re entitled to discharge, and this includes skillfully addressing your student loan debt. If you’re experiencing undue financial hardship, please don’t wait to contact us online or call 843-418-9004 for more information about what we can do to help you today.
