One question many former students have when considering filing for bankruptcy is how their student loans will be handled. In a majority of cases, student loans for college are not dischargeable under bankruptcy rules established in 1998. Too many students had taken out an exorbitant amount of loans for school and between graduation and starting to work would file for bankruptcy, eliminating the need to repay the loans, so Congress passed new rules which made it more difficult to get student loans discharged.
When Will Student Loans Be Discharged In A Bankruptcy?
There are three areas a bankruptcy court will consider if student loans are part of a bankruptcy filing. In order to be relieved of the responsibility, the person will have to show that paying the loan will create an undue hardship on the individual, meaning that if forced to pay they cannot maintain even a minimum standard of living. The second point is that if the time for which the student has to repay the loan will stretch over a significant time. The last point on which the court will consider wiping out a student loan debt is if the student has made a valiant effort to pay off the over an extended period of time, for instance five years, and is still having difficulty making the payments.
While filing for bankruptcy probably will not eliminate the need for repayment of college loans it could help ease or relieve the burden of other qualified debts, enabling a debtor to make student loan payments without exhausting their finances.
Filing For Bankruptcy Alone Can Be Costly Mistake
It is true that the law allows individuals to file for bankruptcy on their own. As with most legal proceedings, pro se, or by self in legal terms, is an acceptable means of a person representing themselves in court. It has often been said that a person who serves as their own legal counsel in court has a fool for a client. While filing bankruptcy petitions on their own, can save money, if not done correctly, it can result in the petition being dismissed or denied.
Court procedures are fairly rigid and there will be a ton of paperwork to be filed. The term filing for bankruptcy can mislead many people to believe it is a simple matter of filling out a few forms and handing them to a clerk in the court. As a broad idea, this is essentially true, but the reality is that the right forms have to be filled out correctly and in the right order to be accepted by the court.
Choosing the right attorney in bankruptcy is as important as determining to hire an attorney. When the time comes that a lawyer is needed talking to legal aid services or to friends who may know attorneys for a recommendation can help locate the one who can work on the bankruptcy professionally. Keep in mind that some attorneys may have a large caseload and not be able to provide the type of service expected. This is something you'll need to discuss with your potential attorney.
It will pay dividends in the long run to do some internet research into bankruptcy attorneys before trusting your financial fate with someone who may not have enough hours in the day to get their work done.
If you’d like to learn more: call us to speak directly with an attorney for a free, no obligation, consultation to see if you qualify for bankruptcy and if it is the right decision for you and your family or your business.
Wessler Law Firm is a small family owned law firm specializing in bankruptcy law since 1982.
Disclaimer: This article is meant for reference only, and is not intended to be legal advice.
For legal counsel regarding your situation, please consult an attorney licensed in your state.