Student Loan Debt and Bankruptcy in 2024
It is a new year, and many borrowers in South Florida are struggling with student loan debt. For quite some time, there has been a common misconception circulating that student loans cannot be discharged in a consumer or personal bankruptcy case. This myth arose because of the complexity in having student loans discharged in the past and the in-depth process a debtor was required to go through in order to prove that their student loans were eligible for discharge. To be clear, even in the past, it was possible to discharge student loans for certain debtors — there was no blanket prohibition without exception against the discharge of student loans. Yet very recently, the process has become significantly easier for debtors.
To be clear, it is now much easier to have your student loans discharged in a bankruptcy case. As such, if you are struggling with student loans in the new year, you should talk with a bankruptcy attorney about your options for discharging this debt. Our experienced West Palm Beach bankruptcy lawyers can tell you more.
New and Easier Process for Adversary Proceedings
In order to have student loans discharged in a consumer bankruptcy case, a debtor will need to file an adversary proceeding. The adversary proceeding is like a separate case that runs parallel to your bankruptcy case, but it will be connected. In the adversary proceeding, you will need to prove that continuing to make student loans payments would impose an “undue hardship” on you. While the adversary proceeding might sound daunting, the new process outlined by the US Department of Justice (DOJ) makes clear that it is straightforward and relatively easy if you have an experienced lawyer.
In years past, the adversary proceeding could be extremely complicated, and it often resulted in significant cost and time to debtors. Now, the process is notably simpler and streamlined. The debtor will now complete a 15-page document known as the “attestation form” that will provide DOJ attorneys with information about your financial circumstances that will allow a determination about whether your loans should be discharged. The DOJ attorneys will make that recommendation to the bankruptcy attorney in your case.
What the DOJ Attorneys Will Look for
What will the DOJ attorneys be looking for in the attestation form material? In short, they will be looking for information about three undue hardship factors:
- Your present ability to pay your student loans based on your current income and expenses;
- Your future ability to pay your student loans, including whether a current inability to pay is likely to continue in the future; and
- Good faith efforts you have made to earn income, manage your expenses, and repay your student loans, including efforts you have made to be in communication with the Department of Education about options for your loans.
Contact an West Palm Beach Bankruptcy Attorney Today
Student loan payments take an enormous toll on debtors in South Florida, and it can be difficult to get your life on track financially with an amount of student debt that feels insurmountable. We want to emphasize that you could be eligible to have your student loans discharged in a bankruptcy case, and the process is much easier than you might think. Do not hesitate to get in touch with an experienced West Palm Beach bankruptcy lawyer at Kelley Kaplan & Eller, PLLC to discuss your loans and financial circumstances. We have years of experience representing individuals in bankruptcy cases in South Florida, and we can talk with you today about options for having your student loans discharged in a personal bankruptcy case.
Sources:
justice.gov/d9/pages/attachments/2022/11/17/student_loan_discharge_guidance_-_fact_sheet_0.pdf
law.cornell.edu/uscode/text/11
