One of the most frequently asked questions as a bankruptcy attorney is, can I discharge my student school loans in bankruptcy? Most bankruptcy attorneys will tell you that it is not possible, but this is simply not true. The process of paying off debt associated with your education is not a simple or automatic process, it takes a bit of effort, but paying off some or all of your student debt is worth it in the end. Section 523(a)(8) of the US Bankruptcy Code states that student loans are exempt from discharge unless they represent “undue hardship.” For the vast majority of people who have a five-figure student loan or loans, paying the exorbitant fees every month certainly feels like undue hardship, but the term “undue hardship” is interpreted very specifically by the bankruptcy court. But the good news is that recent cases have emerged that give students with loan debt some hope of relief.

The simple fact is that most bankruptcy attorneys will tell you that it is impossible to discharge such debts in bankruptcy, you are either inexperienced or just don’t want to go through all the trouble to do so. That’s why it’s so important that you find an experienced bankruptcy attorney, not just the cheapest one you find on your Google search. The following is a brief explanation of some of the requirements to discharge your student loans in a Chapter 7 bankruptcy.

Your first step in getting your student loans forgiven is to apply for forgiveness. Most people are under the mistaken belief that they can’t get these loans forgiven, which is why most never even try and most bankruptcy attorneys have no idea what I’m about to tell you. Here are some interesting statistics to prove this point. According to a Harvard Law School study of people who have student loans and file for bankruptcy, of that group of people, 99.9% never attempt to discharge this debt in their bankruptcy filing. That in itself is a staggering figure. Of those who actually file for student debt discharge in bankruptcy, the bankruptcy court grants 40% partial or full discharge of their loans. Now think about that for a minute, almost half of the people who apply for a discharge of their student loans receive it, but 99.9% of people with student loans who file for bankruptcy don’t even apply. This equates to roughly 70,000 people who file for bankruptcy each year qualify to have their student debt discharged in whole or in part, but only 0.01% of those 70,000 even try. This means that 28,000 people a year who could discharge their student debt in their bankruptcy petition don’t even try. Let that sink in for a minute, people…

The second, and possibly the most important, aspect of getting a discharge of student debt is: do you qualify? The most commonly used test to determine if a student loan qualifies for a bankruptcy discharge is called the Brunner Standard. This rule is based on the following case: United States Court of Appeals, Second Circuit. Marie BRUNNER, Appellant, c. CORP. OF HIGHER EDUCATION SERVICES OF THE STATE OF NEW YORK, Callee. No. 41, File 87-5013. (Cite as: 831 F.2d 395) The ruling in this case has given us three circumstances that must be shown in order for a person seeking to discharge student debt to qualify. These rules are as follows: 1. If you had to pay off your student loans, you would not be able to maintain a minimum standard of living for yourself and/or your family; 2. The financial circumstances that caused you to be unable to repay your student loans are likely to be present for the remainder of the repayment period of those loans; 3. You have made a good faith attempt to repay your student loans. If you can simply meet all three standards, it is certainly worth your time and money to try to have your student loans partially or fully discharged in bankruptcy.

The third criterion, if you want to get these debts discharged through bankruptcy, you must take additional steps, which are not covered by your usual attorney-client retainer to file for bankruptcy. what does this mean to you? It means that in addition to filing bankruptcy and the normal legal fees and filing fees associated with that, there will be additional legal work that will need to be paid for this service, outside of the attorney-client retainer agreement for your standard bankruptcy. With the vast majority of debts that are usually filed in bankruptcy, you simply include them on the schedules of the bankruptcy petition. This is not the case with student loans, with student debt your bankruptcy attorney must file what is called an “adversarial proceeding” in bankruptcy court. These adversarial proceedings are actually an entirely separate lawsuit, filed in bankruptcy court, associated with your bankruptcy petition. Essentially, it involves filing a lawsuit against the lenders who own your student loan debt, in order to get some or all of that debt forgiven. It is extremely important to understand that this is a very complex legal area and that you should always have an experienced bankruptcy attorney working for you. Many people try to file for bankruptcy on their own, I would never suggest this, or even attempt to describe this process as it is not within the scope of this article. Get an experienced bankruptcy attorney to help you do this.

The fourth important thing that the Harvard Law School study determined, which are characteristics that are common to almost all student loan discharged bankruptcy cases, are the following: 1. The debtor (the person who files for bankruptcy protection under the US Bankruptcy Code), was more likely than not, unemployed; 2. The debtor usually had some type of medical hardship, which contributed to this situation; 3. The debtor generally had less income than the year before he filed his bankruptcy petition. These are not clear-cut requirements, which have been outlined earlier in this article, but these are facts that were probably common to all bankruptcy filings that resulted in discharge of student loan debt.

Finally, the last important part of the equation is that you must file for bankruptcy under Chapter 7 of the US Bankruptcy Code. The two most common forms of bankruptcy used are Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. In a Chapter 13 bankruptcy, you (with the help of your attorney) set up a debt payment plan (which must be accepted by the Bankruptcy Court), in which you pay a portion of your unsecured debt based on your income and expenses, in a period of three years. to the five-year period. In a Chapter 7 bankruptcy, you are allowed immediate discharge of these unsecured debts, with a few exceptions, such as student loans, alimony, and child support. To file the adversarial proceeding described earlier in this article, you must be in a Chapter 7 bankruptcy. This option is NOT available in a Chapter 13 bankruptcy.

In conclusion, if you believe you meet the requirements outlined in this article and are experiencing undue hardship in repaying your student loans, then bankruptcy is an option to consider. That’s why it’s so important to find an experienced bankruptcy attorney who understands the U.S. Bankruptcy Code. As in another article I previously posted on canceling income tax debt in bankruptcy, the Student debt discharge is another little known fact about bankruptcy law that only an experienced bankruptcy attorney would know. A good way to determine if you’re sitting in the office of an experienced bankruptcy attorney is to ask one of two questions: Can you discharge student loans in bankruptcy? o Can income tax debt be canceled in bankruptcy? If any of these questions are answered in the negative, you are in the paper seller’s office and not an experienced bankruptcy attorney. Like anything else in life, you get what you pay for, and shopping around for lawyers based on price is a very expensive way to learn this life lesson.