A bankruptcy lawyer who doesn’t have experience in this area may tell you that you can’t file bankruptcy on student loans. In general, these loans aren’t always dischargeable, and whether they are may depend on the contract or promissory note that you signed when you accepted the student loans. However, there is a way to file bankruptcy on student loans in some situations. Having them listed on your bankruptcy may even have the potential to adjust the way that your bankruptcy is viewed.
Dealing with Student Loan Debt
There are a couple of ways that student loans can be dismissed or forgiven, and they all involve serious situations. In other words, you can’t simply say you couldn’t find a job in your field or that your degree isn’t what you thought it was going to be when you graduated. However, you can earn student loan forgiveness by working in your field in specific locations and by completing a number of other tasks. In some employment situations, an employer might even pay your student loans for you through various programs.
Undue Hardship and Student Loans
In situations that aren’t so progressive, an extreme circumstance may cause you to be unable to pay off your student loans. For example, if you die your student loans would be forgiven. If, after twenty-five years of making timely payments, your loans still aren’t paid off, they can be forgiven. They can also be forgiven if you find yourself in a medical situation that causes you to be declared disabled. This is because as a person on disability, you aren’t able to work and earn the money it would take to pay back the student loans.
Then there is “undue hardship.” This clause doesn’t mean that you are disabled or not working, but it can mean that you don’t make enough money, and most likely never will make enough, to pay back your student loans without causing yourself to live below the poverty line. If you are in this type of financial situation, you are coincidentally most likely to also be in a situation that causes you to file bankruptcy.
Limits and Amounts That Affect Bankruptcy
While most people don’t realize it, there are limits as to who can have a bankruptcy discharged. You can’t just be a couple of thousand dollars in debt, decide you want to start from scratch, and file bankruptcy on all of your debts. The courts want to see that your debt is so far above what you can afford to make payments on that you would be unable to do so and still survive. In some cases, it is the student loans that tip the scales. This is because many people invest so much loan money in their educations that the resulting debt sometimes outweighs all of their other debts put together.
Keep in mind that the courts will want to see that you made every effort to meet your obligations. You should also know that if you are in default on your student loans, you will be unable to get another one in the future. On top of that, while you are in default and before you file bankruptcy, you may have to surrender any tax refunds that you may be owed. Click here for alternatives for student loan debt.
It is for these reasons that sometimes your best option is to see if you qualify to include your student loans in your bankruptcy. Although it isn’t guaranteed, it also isn’t impossible. However, you have to make sure you have experienced bankruptcy lawyers on your side.