The Department of Education has recently come to a decision regarding regulations pertaining to bankruptcy discharge requests for government-backed student loan debt. This new stance creates an avenue for your bankruptcy attorney in Florida to follow in a student loan bankruptcy proceeding.
Undue hardship factors that will be considered
Whether a debtor files for bankruptcy as a result of one or multiple factors beyond his control, and the impact that these factors have on the debtor’s ability to repay the student loan debt. This can include a situation such as a divorce that results in the sudden and permanent lessening of family income.
- Whether significant time has passed since the student loan debt was taken on by the debtor.
- Whether a debtor’s other expenses are reasonable and they are not voluntarily engaging in unnecessary expenses in lieu of using their money to repay their student loan debt.
- Whether a debtor who claims undue hardship for physical or mental anguish can qualify for Total and Permanent Disability Discharge (TPD) or other administrative discharges that are available to them. These may include, but are not limited to:
- Death discharge
- Closed school discharge
- False certification discharge
- False certification ability to benefit unauthorized signature or identity theft
- Unpaid refund discharge
- Borrower defense
- Whether a debtor is approaching retirement in the near future. This takes into consideration the age of the debtor at the time his/her student loans were taken on, and also the resources that should be available to him/her during retirement that will allow them to repay the student loan debt. Those borrowers who choose to take on this student loan debt at an older age cannot claim undue hardship in attempt to rid themselves of these loans based solely upon their age.
- Whether a debtor’s health has changed drastically from when the debtor”s student loan debt was taken on to present time.
- Veterans who are deemed unemployable because of a service-connected disability. This is determined by the Department of Veterans Affairs.
- Whether a debtor had the mental or physical capacity to look into any sort of administrative discharge option or income-driven repayment plans that may have helped the debtor take positive action against their incurred student debt.
Pursuing a smoother process in claiming undue hardship
While this action from the Department of Education has provided bankruptcy attorneys a better way to claim undue hardship as the argument for discharge of their client’s student loan debt, it will definitely require time for the process to be smoothed out and constant throughout the court system. Even if the government will not allow the student loan debt to be completely, 100 percent discharged, they are now allowed to “agree to discharge of a portion of the amount owed,” which is better for the client than being entirely denied.
If you have more questions regarding undue hardship and student loan debt, Kelley & Fulton can certainly help. We invite you to contact us to speak with an experienced and knowledgeable bankruptcy attorney in Florida and pursue a fresh start to your life today.