Florida Bankruptcy Lawyers on Student Loans

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Monday, October 12th, 2009 Subscribe To Our Feed

For people only a few years out of college, student loans may comprise the majority of their debt. And, this debt can be hard to manage along with a mortgage, automobile loans and other expenses for those just starting out. Unfortunately, due to a high rate of default, the federal government - who provides most of these loans – has put in place tighter limitations for delaying or cancelling student debt. As a result, most student loans are not dischargeable under either Chapter 13 or Chapter 7 bankruptcy. Bankruptcy lawyers in FL can help you determine whether or not your student loan debt is dischargeable.

There are exceptions to this rule, however, depending on the debtor’s individual position. The trustee assigned to your case and Florida bankruptcy lawyers will go over your situation in light of the government’s guidelines to determine if exempting these loans from bankruptcy will put “undue hardship” on you or your dependents. The trustee will subject your information to three tests:

1. Will exempting these debts from discharge create an “undue hardship” on the debtor’s income? In other words, will exempting these debts from discharge cause the debtor to be unable to provide food and shelter for his or her family to a minimum standard?

2. Is it reasonable to assume that the income of the debtor is likely to remain at a level that makes statement 1 true for the majority of the repayment period of the loan? In other words, is the debtor’s income likely to soar in say, a year or so, making future repayment of the loan more than possible?

3. Has the debtor made a good faith effort in the past to repay these loans? Did the debtor at least try to pay off his or her student loans in a timely manner in the past? Is the inability to pay a recent event?

When FL bankruptcy attorneys file your petition, you must supply at that time proof that you cannot make the student loan payments and that you do not expect to be able to in the future. You need to apply for a “hardship discharge” for these debts before your other debts have been discharged. Guidelines for the discharge of education debt are not part of the Bankruptcy Code and the determinations on these are left up the bankruptcy courts in the individual states. Fees for filing for this hardship discharge are not usually included in the standard fees for filing bankruptcy and must be paid separately.

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