Student Loans Are Restarting: Can You File for Bankruptcy Instead?
Student loan payments for debtors with federal student loans are restarting, and it is important to be prepared and to understand your options. For borrowers with crushing student loan debt — which is a reality for many borrowers in South Florida — the possibility of making monthly student loan payments can seem like an impossibility. If you are one of the millions of student loan borrowers, you may be wondering about other options. In particular, you might be wondering if one of those options is filing for bankruptcy. Indeed, you may be looking into the possibility of filing for bankruptcy rather than finding yourself in a position of being unable to pay your student loans.
If you are currently considering bankruptcy due in entirely or in part to your federal student loan debt, you should know that it may be much easier than you think to have your student loans discharged through bankruptcy. Our bankruptcy attorneys in West Palm Beach can tell you more.
Recent Guidance Makes It Easier to Discharge Student Loans in Bankruptcy
Our lawyers want to emphasize how new guidance from the U.S. Department of Justice (DOJ) makes it easier for debtors to have student loans discharged in bankruptcy cases. Although it is important to know that the general requirement for a discharge has not changed (a debtor must still show that continuing to pay their student loans would impose an “undue hardship”), the overall process has become significantly easier.
According to the DOJ, it will now, with the Department of Education (DOE), review the debtor’s financial circumstances and student loan history to determine whether the debtor has likely met the “undue hardship” requirements. Specifically, to make that determination, the DOJ will be looking at evidence provided by the debtor — contained within a 15-page attestation form — about their present ability to pay, future ability to pay, and good faith efforts to repay student loans in the past. The DOJ can then make a recommendation for discharge to the bankruptcy court.
Determining Your Eligibility for Bankruptcy
In order to begin the process of asking a bankruptcy court to discharge your student loans, you should speak with a bankruptcy lawyer in West Palm Beach as soon as possible to determine your eligibility for bankruptcy.
If you want to go through a relatively quick liquidation bankruptcy under Chapter 7, you will likely need to pass the “means test” to show that a liquidation bankruptcy would not be abusive, based on your assets and income. If you want to file for a reorganization bankruptcy under Chapter 13, you can discuss your employment situation and the likelihood that you will be able to make regular monthly payments for a period of three to five years in order to have remaining debts (including student loans) discharged.
Contact Our West Palm Beach Bankruptcy Attorneys
Are you ready to begin thinking about bankruptcy in order to discharge your student loans? One of the experienced West Palm Beach bankruptcy lawyers at Kelley, Kaplan & Eller can learn more about your circumstances and can provide you with more information today. We are here to help you seek a discharge of your student loans in a personal bankruptcy case.
Sources:
justice.gov/civil/page/file/1552676/download
law.cornell.edu/uscode/text/11
