Having to undergo bankruptcy is overall an undesirable situation, but the outcome may make it worthwhile. That is, you may be able to discharge unsecured debts like credit cards, medical bills, personal loans, and old utility bills from your immediate financial obligations. If your main concern is your burdensome student loans, though, you must understand that this is typically categorized as a nondischargeable debt, unless you can prove that extenuating circumstances make it otherwise. That said, please continue reading to learn if it is possible to get your student loans discharged by claiming an undue hardship, and how an experienced Louisville, Kentucky consumer bankruptcy lawyer at Schwartz Bankruptcy Law Center can help you gather the evidence you need to bring before the bankruptcy court for a positive decision.
Can student loans ever be discharged in bankruptcy with an undue hardship?
You must understand that an undue hardship is purposefully difficult to satisfy. This is because, in the context of your student loans, the Kentucky bankruptcy court will want to protect the stability and integrity of these government-backed programs. Nonetheless, if you petition for adversary proceedings, the court may run a three-part “Brunner test” to determine whether your student loans should be made dischargeable because your financial situation is severe enough as it is. This test will analyze the following factors:
- Whether or not you can still maintain a minimal standard of living for yourself and your dependents if you are forced to repay your student loans.
- Whether or not your severe financial hardship will likely continue for the majority of your projected repayment period.
- Whether or not you have demonstrated good-faith efforts to repay your student loans before petitioning for a consumer bankruptcy case.
- Whether or not you suffer from other hardships like chronic illness, disability, long-term low earning potential, etc.
What should I do if the bankruptcy court denies my student loan discharge request?
You and your lawyer may have made a diligent effort to provide the medical documents, employment records, financial papers, expert testimony, etc., necessary to exhibit your extreme financial status. Even so, the Kentucky bankruptcy court and Department of Justice (DOJ) may, most unfortunately, deny your hardship discharge request.
You must not feel defeated just yet, though. For one, after consulting with your lawyer, they may encourage you to appeal the court’s decision. This may be applicable if you have reason to believe they misused the Brunner Test or overlooked components of your solid evidence. Otherwise, you may attempt to negotiate partial relief of this outstanding debt.
If not, though, your lawyer may suggest that you seek financial relief outside the court system. Namely, you may be eligible to modify your repayment terms with your lender, apply for a debt consolidation program, or opt for administrative remedies offered by the Department of Education. If all else fails, you may refile for an undue hardship if your financial circumstances worsen even more as your bankruptcy case progresses (i.e., you lose your job, you become ill, etc).
In conclusion, we suggest you employ the services of a skilled Louisville, Kentucky consumer bankruptcy lawyer from Schwartz Bankruptcy Law Center if you want the best possible chances at a positive legal outcome. We look forward to serving you.
