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How To Declare Bankruptcy For Student Loans

How Do I Prove Undue Hardship On My Student Loan

Can I Declare Bankruptcy On Student Loan Debt?

To prove undue hardship, you must file a separate adversary proceeding with the bankruptcy court explaining your situation and why repayment of your student loan would be an undue… Read more >

To prove undue hardship, you must file a separate adversary proceeding with the bankruptcy court explaining your situation and why repayment of your student loan would be an undue hardship. Please consult with a bankruptcy attorney to discuss your options. Learn more >

Student Loan Discharge In Bankruptcy

It is possible to discharge student loans in bankruptcy although it is not easy. The procedure is that an adversary proceeding must be filed in the bankruptcy court to prove that the undue hardship standard has been met.

In addition to discharge for undue hardship, we file adversary cases to show that in many cases, private student loans are actually nothing more than consumer loans disguised as student loans. If we can show that the private loan is a non-qualified education loan, it is discharged like any other consumer debt such as a credit card. Various arguments exist such as the loan amounts were beyond the cost of attendance, for an ineligible institution or for an ineligible student. We teach this topic to other attorneys around the nation and while it is a relatively new argument, there is plenty of case law supportive of discharge. If you have an attorney tell you that a student loan can never be discharged in bankruptcy, that is the old and very outdated view, and frankly, you should see another attorney who actively practices in this area every day.

The procedure is as follows:

The well known Brunner standard is followed in Florida which requires that you show:

  • the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for the debtor and the debtor’s dependents

  • additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans and

  • What Is The Standard For Discharging Student Debt In Bankruptcy

    Generally, the standard to discharge student loans in bankruptcy is a showing that the payment of the debt will impose an undue hardship on you and your dependents. Generally, most courts will use the Brunner test to determine if there is an undue hardship imposed on you and your dependents.

    The Brunner test has three main factors that courts will focus on:

    • Whether you can maintain a minimal standard of living for yourself and your dependents if you must repay the student loan
    • Whether you and your dependents have circumstances, above and beyond normal circumstances, that will extend through at least a significant portion of the loan and
    • Whether you have made good faith efforts toward repaying your student loan.

    We will go into further detail about each of these factors below.

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    Why To Use Debt Settlement

    • Reasons Why You Can Take Advantage of Debt Settlement Outside of the debt settlement industry, debt settlement is rarely recommended as a viable solution to managing your debt.
    • Avoid bankruptcy.
    • Pay off your debts in less time.
    • Disadvantages of debt settlement.

    Debt settlementWhat are the pros and cons of a debt settlement? The pros and cons of debt settlement and consolidation differ, including how long it will take and how it will affect your credit. They are both meant to make your debt more manageable.Is debt settlement necessarily a bad thing?Paying off debt can negatively impact your credit score, but not in all cases. In some situations, there are ways to negotiate a seven-year penalty,

    Contact Us For A Free Consultation

    Can you File Bankruptcy for Student Loans?

    If you have questions about your student loan or any other debt, the seasoned and compassionate Ohio debt-relief attorneys at Fesenmyer Cousino Weinzimmer offer a free consultation to evaluate your entire financial situation. Even if total discharge is not possible, we can help you explore other options, such as negotiating with the lender to get more favorable terms, and modification or consolidation of the student loan debt.

    Delaying can only worsen your situation, so contact us online or call the Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer today so we can determine what debt relief solutions will work best for you.

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    Chapter 13 And Student Loans

    A case under chapter 13 is often called reorganization. In a chapter 13 case, you submit a plan to repay your creditors over time, usually from future income. These plans allow you to get caught up on mortgages or car loans and other secured debts. If you cannot discharge your student loans based on undue hardship in either a chapter 7 or chapter 13 bankruptcy, there are still certain advantages to filing a chapter 13 bankruptcy. One advantage is that your chapter 13 plan, not your loan holder will determine the size of your student loan payments. You will make these court-determined payments while you are in the Chapter 13 plan, usually for three to five years. You will still owe the remainder of your student loans when you come out of bankruptcy, but you can try at this point to discharge the remainder based on undue hardship. While you are repaying through the bankruptcy court, there will be no collection actions taken against you. You may have other options, depending on how judges decide these cases in your judicial district. For example, some judges allow student loan borrowers to give priority to their student loans during the Chapter 13 plan.

    What Happens To Business Tax Liabilities In Bankruptcy

    Companies are not fired because they have been liquidated. The debtor must file his tax return on time and pay the income tax due. No payment of back taxes after submitting an application. The IRS can refund overpaid taxes for other tax debts upon request or send them to a liquidator upon request.

    How long does foreclosure take

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    Alternatives To Bankruptcy For Student Loans

    Since bankruptcy can be an expensive and cumbersome process, most experts see it as a last resort for borrowers. Consider bankruptcy after youve exhausted all other options, like debt consolidation, credit counseling and negotiating with creditors for a lower payment or interest rate.

    If youre balancing student loan payments with other expensive, dischargeable debts like credit cards and medical bills, then bankruptcy may be able to provide relief. But if student loans are your only concern, consider these alternatives.

    What Is A Chapter 13 Bankruptcy Plan

    Bankruptcy Questions : How to Claim a Student Loan on Bankruptcy

    A Chapter 13 bankruptcy plan is a reorganization plan detailing how you will pay some or all of your creditors. A typical Chapter 13 plan lasts three or five years, during which you make… Read more >

    A Chapter 13 bankruptcy plan is a reorganization plan detailing how you will pay some or all of your creditors. A typical Chapter 13 plan lasts three or five years, during which you make monthly payments to a court-appointed representatives, called a trustee, under a court-approved plan of reorganization. That trustee distributes plan payments to your creditors as scheduled in your Chapter 13 bankruptcy plan.

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    Central Bank Report Of Sri Lanka

    Sri Lanka has imposed a moratorium on aid with the coronavirus until October 2020. It was then extended for another six months. In August 2020, a central bank report found that about 25% of all loans to the private sector were in default. Some banks have said that in some cases up to a third of their loan portfolios are subject to a moratorium.

    If You Owe Money To People Or Companies In The Eu

    Bankruptcy might not be right for you if you owe money to people or businesses in the EU. These debts might not be covered by bankruptcy.

    Your creditors could keep asking you for money, for example by calling you and sending you letters.

    If you live in the EU, they could take you to court in the EU.

    EU creditors still have to sue here in the UK rather than abroad in the EU, even if they have an existing judgment. The UK will recognise EU judgements entered or started before 31 December 2020.

    If you live in the UK but have a home in the EU with a mortgage from an EU lender, the lender could take you to court in the EU.

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    Procedure To Discharge Your Student Loan In Bankruptcy

    If you want to try to discharge your student loan in bankruptcy, you must file an adversary proceeding to determine dischargeability with the bankruptcy court. But that’s not all. You’ll need to present evidence and prove to the court that payment of your loans will cause an undue hardship. It’s likely that you’ll need to retain an expert to testify about your ability to be gainfully employed in the future.

    Can The Court Discharge A Portion Of My Student Loan Debt

    Can I Declare Bankruptcy with Student Loans in Canada

    Yes. The court is not forced to choose between all or nothing in a student loan discharge case. The court has the option to discharge a portion of your student loans if they choose to.

    When looking to discharge student loans in bankruptcy, the possibility of a partial discharge can be good or bad, depending on your situation. Sometimes, a partial discharge allows us to drastically reduce your student loan payments which can change your life.

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    Options For Dealing With Outstanding Debtstudent Loan Debt Vs Unsecured Consumer Debt

    Unsecured Consumer Debt

    Consumer proposal Yes Yes, might encounter major problems where the consumer proposal is filed less than seven years from the date of end of debtor?s education
    Personal bankruptcy Yes Discharge with respect to student loan indebtedness only available where discharged bankrupt ceased attending school seven years prior to filing for personal bankruptcy, or once a discharged bankrupt has been out of school for five years after the date of filing for bankruptcy a debtor can apply for a court-ordered discharge of their student loan debt

    How Do I Prove Undue Hardship

    The burden of proof is on you to prove that paying of your student loans will cause you undue hardship. You will need to provide financial records and other evidence such as tax returns, bank statements, utility bills, medical records and letters from doctors, documentary evidence of job search efforts, etc.

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    How Difficult Is It To Discharge Student Loans In Bankruptcy

    Congress decided in 1976 that federal student loans could not be discharged in bankruptcy except under conditions of undue hardship. Private student loans were placed in the same category in 2005. This means that student loans are in the same category as child support, alimony, and criminal fines.

    Only 1% of bankruptcy filings attempt to include student loans. Around 40% of those succeed. Most bankruptcy attorneys will not attempt to have student loans discharged unless they are very confident that their client meets the conditions.

    Most successful attempts to discharge student loans fall into one of three categories:

    • Severe and documented medical problems. Serious medical conditions that do not allow you to work and are unlikely to be resolved are a legitimate reason to include student loans in bankruptcy.
    • Extreme economic circumstances. If you are experiencing extreme poverty with no realistic possibility of improvement you may be able to persuade a bankruptcy court to discharge student loans.
    • Age. Individuals who are still burdened by student loans in their retirement years may get a favorable decision from a court.

    Experienced bankruptcy attorneys state that serious and ongoing medical problems are the most successful basis for an attempt to include student loans in bankruptcy.

    How Bad Is Debt Settlement For Your Credit

    The case for allowing students to file for bankruptcy over loan debt
    • Your creditors may not be willing to negotiate. Not only is there no guarantee that a debt settlement company will settle for all of its clients.
    • You may have even more debt. When you stop paying your debts, you may have to repay interest or interest.
    • A commission may be charged even if not all of your debts have been paid.

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    Before Filing For Bankruptcy Consider Your Choices

    Obtaining a bankruptcy discharge of your student debts is difficult, but alternative options are available to desperate borrowers before resorting to this last-ditch attempt.

    If our clients cant show that they have no chance of repaying the loan, Hornsby says, then the Department of Education typically replies by asking the borrower to join in an income-based repayment plan.

    Repayment arrangements based on federal income Based on any changes in your income, adjust your monthly cost. As a result, your monthly student loan payment reflects how much you can afford to pay.

    Pay As You Earn and Revised Pay As You Earn are two income-driven repayment schemes recommended by Hornsby . Your credit score wont be destroyed as it would be in bankruptcy, and youll just have to pay 10% of your discretionary income with these programs. Any leftover amount is forgiven after the payback term.

    How Long Will The Adversary Proceeding Take For Federal Student Loans

    As stated above, the adversary proceeding works much like a lawsuit in that it starts with a complaint and continues through a trial and appeal. How long this takes may depend on whether you have a federal student loan or a private student loan.

    When dealing with federal student loans, you can expect the US government to fight the case to the end and there will generally be no settlement of any value to you offered by the federal government. As such, the adversary proceeding will almost always require proceeding through the summary judgment phase at the very least. This can take up to one year to complete. If the case requires a trial or goes through an appeal, you can expect this timeline to increase.

    On the other hand, the odds of settling your case prior to trial are much higher with private student loans. These lenders tend to recognize that they may lose the trial. As a result, they may be more willing to negotiate than the government would be.

    Every case is different and a student loan lawyer can help give you a better idea of the timeline specific to your situation.

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    Can You Declare Bankruptcy On Student Loans

    By | Submitted On August 24, 2009

    When facing serious financial difficulties, most people resort to filing bankruptcy to eradicate their personal debts and start anew. Though it’s clear that declaring bankruptcy is a viable option, discussing it further with your lawyer will determine whether it really is the best move to take. Some debts, such as those on student loans, can’t be nullified by bankruptcy unless certain special conditions are met.

    Other debts, such as child support obligations and federal taxes, also can’t be resolved by bankruptcy. Likewise, drunk driving cases that resulted to criminal fees or judgments will still have to be attended to. Student loans fall into this category.

    It’s important to understand the logic behind student loans. Congress makes it difficult to eliminate student loans to encourage lending companies to give out such loans. This lets more individuals go to college and generate higher incomes as they reach working age.

    Resorting to bankruptcy because of student loan difficulties isn’t easy. You have to be familiar with “undue hardship” if you want to wipe out your loans. “Undue hardship” basically means you can’t settle your debts, even when living at the lowest acceptable standard of living set by the government. When that sounds like your situation, then a sympathetic judge just might order your student loan debts wiped.

    Do I Need To Authorize Ecmc To Talk To Someone Other Than Myself About My Bankruptcy Case

    How To File Bankruptcy On A Student Loan

    No. However, if you wish ECMC to discuss your private information to someone other than you or your attorney, we will need you to complete and sign an Authorization giving your consent… Read more >

    No. However, if you wish ECMC to discuss your private information to someone other than you or your attorney, we will need you to complete and sign an Authorization giving your consent. Send the form directly to ECMC. Mail the form to:


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    Student Loan Bankruptcy Discharge

    The court will only discharge you from your student loan in a bankruptcy if they believe that you have earnestly attempted to repay your student loans. They must be confident that you have experienced, and will likely continue to experience, financial struggles that make you unable to pay back these debts.

    How Will Debt Settlement Affect My Credit Score

    If you do not pay off the entire balance as agreed, paying off the debt will have a negative effect on your creditworthiness. Your credit score is based on several factors, so the exact impact on your credit score will depend on other information in your credit report.

    Do medical bills affect your creditHow to prevent medical bills from destroying your credit? How to keep medical bills from ruining your credit. Count on your medical debts. Check which costs your health insurer reimburses and how much you have to pay yourself. Pay your bills monthly. Discuss the bill. To apologize. Sign a contract with a collection agency.Can medical bills ruin your credit?An

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    Minimal Standard Of Living

    The first factor that will be taken into consideration is your ability to maintain a minimal standard of living for yourself and your dependents given your student loan debt and monthly payments. This does not mean that only people living in poverty with no possessions will satisfy this requirement. Courts will look at your monthly income and your monthly expenses including the amount necessary to repay your student debt. The purpose of this is to determine the reasonableness of your budget as a whole.

    A minimal standard of living includes, among other things, furnished and maintained shelter, basic utilities, food, clothing, vehicles, insurance, and even the ability to pay for a source of recreation. Again, the court will look at the reasonableness of each of these expenses.

    This prong can be tough to meet for individuals with federal student loans due to the fact that there are income-driven repayment plans available, which can greatly lower monthly payments. If your monthly student loan payment is $0 or something close to that, it is hard to argue that such a small amount is preventing you from sustaining a minimal standard of living. However, it is possible for an individual to have unaffordable payments even while on an income-driven repayment.

    Courts may also consider the individuals spouses income in addition to the individuals income when determining the minimal standard of living even if the individuals spouse has not declared bankruptcy as a co-debtor.


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