Students Loans in a Liquidation Versus Reorganization Bankruptcy
If you owe a significant amount of money in student loans and have been struggling to repay what you owe, you might be thinking about bankruptcy. It is critical to know that the process for seeking a discharge of student loans in bankruptcy changed recently, making it markedly easier for individual debtors to have their educational debt fully or partially discharged. Yet you may be wondering: what should I expect in terms of student loan discharge in a liquidation versus a reorganization bankruptcy? Individual debtors tend to file for either Chapter 7 bankruptcy (liquidation) or Chapter 13 (reorganization), and a West Palm Beach bankruptcy attorney at our firm can explain more about the difference in relation to student loans and debt discharges.
How Liquidation Versus Reorganization Bankruptcies Work
To know what will happen with a discharge of student loans in an individual bankruptcy case, it is essential to understand how the different types of individual bankruptcies work.
In liquidation bankruptcies (i.e., Chapter 7 cases), debts are discharged in about four to six months after the bankruptcy filing. With reorganization bankruptcies (i.e., Chapter 13 cases), however, discharges will occur after the debtor has completed the terms of their repayment plan over the course of three to five years.
What to Expect with a Student Loan Discharge
The requirements for having student loans discharged will not, in general, change whether you are filing for a liquidation or reorganization bankruptcy. In both types of bankruptcies, you will need to prove that continuing to pay your student loans would impose an undue hardship, and you will do this by providing information in an “Attestation Form” about your financial circumstances and efforts to manage your students up to that point. A Department of Justice (DOJ) attorney will review the information in your form and make a recommendation to the bankruptcy judge about the discharge of your educational debt.
In reviewing the form, the DOJ attorney will be assessing your present ability to pay your student loans, your likely ability to pay your student loans in the future, and whether you have made a good faith effort to manage or pay your student loans previously. If your loans are approved for a full or partial discharge, the date of discharge will depend on whether you have filed for Chapter 7 or Chapter 13 bankruptcy.
Contact Our West Palm Beach Bankruptcy Attorneys Today
Although having student loans discharged through bankruptcy is still slightly more complicated than having other types of unsecured debt discharged, it is important to recognize that the process has become significantly easier and much more straightforward for debtors. Accordingly, with assistance from a bankruptcy lawyer in West Palm Beach, you could be eligible to have your student loans discharged by filing for Chapter 7 or Chapter 13 bankruptcy.
Do not hesitate to contact one of the experienced West Palm Beach bankruptcy lawyers at Kelley Kaplan & Eller, PLLC to find out more about how we can assist you with seeking a discharge of your student loans through bankruptcy. We are here to help with student loan bankruptcy cases.
Sources:
law.cornell.edu/uscode/text/11
justice.gov/civil/file/1553726/dl?inline
