Student loan payments can become difficult to manage when combined with other debts and everyday expenses. While student loan debt is generally treated differently from many other debts in bankruptcy, relief may be possible in certain circumstances.
Bankruptcy Lawyers Vegas provides general information about student loan debt, bankruptcy, and how attorneys may assist individuals in understanding available options.
Can Student Loans Be Discharged in Bankruptcy?
Student loans are not automatically eliminated by filing for bankruptcy. In many cases, a borrower seeking to discharge student loan debt must pursue an additional proceeding within the bankruptcy case and demonstrate that repayment would meet the applicable legal standard for undue hardship.
Whether student loan debt qualifies for discharge depends on the facts of the case, the type of loan, and applicable law.
Student Loans and Chapter 7 Bankruptcy
Filing Chapter 7 bankruptcy may discharge certain qualifying unsecured debts, potentially reducing other financial obligations. Student loans generally remain unless the borrower successfully establishes that the debt is eligible for discharge.
The bankruptcy process may still affect other debts and therefore change a borrower’s overall financial situation.
Student Loans and Chapter 13 Bankruptcy
Under Chapter 13 bankruptcy, eligible individuals generally make payments through a court-approved repayment plan lasting three to five years. Student loan obligations may be addressed during the plan, but any remaining student loan balance is generally not discharged simply because the Chapter 13 plan has been completed.
Different rules may apply when a borrower separately establishes eligibility for discharge.
How Attorneys May Assist With Student Loan Debt
An attorney familiar with bankruptcy and student loan issues may help evaluate a borrower’s circumstances and explain possible options. Depending on the situation, assistance may include:
- Reviewing federal and private student loan obligations
- Evaluating whether bankruptcy could affect the debt
- Explaining the undue-hardship standard
- Reviewing Chapter 7 and Chapter 13 options
- Assessing the effect of other debts on the borrower’s finances
- Explaining non-bankruptcy options that may be available
Other Options for Managing Student Loan Debt
Bankruptcy is not the only potential approach to student loan difficulties. Depending on the type of loan and eligibility, borrowers may have access to repayment plans, deferment or forbearance, consolidation, rehabilitation, or certain federal loan forgiveness or discharge programs.
Understanding the type of student loans you have, your overall financial circumstances, and the available relief options can be an important first step toward addressing student loan debt.
