Posted on: 18 March 2018
Getting a college education is an important part of life, and a lot of people end up turning to student loans in order to pay for the tuition. If you took out student loans years ago when you went to college and are now struggling to pay your bills, you might want to find out if filing for bankruptcy would help eliminate the student loan balances you still have. Here are several things you should understand about bankruptcy and student loan debts.
Bankruptcy Does Not Automatically Discharge Student Loans
If you asked a bankruptcy lawyer if filing for bankruptcy would wipe out your student loans, the lawyer would probably tell you that bankruptcy will not eliminate student loans as this is the truth in most cases. While there are debts that Chapter 7 bankruptcy will immediately wipe out without question, student loan debt is not one of these things; however, there are times when bankruptcy can help eliminate student loan debts.
When Bankruptcy Can Help with Student Loan Debts
If you have a lot of debt, including student loan debt, and if you do not earn a lot of money, you can file for Chapter 7 bankruptcy for help with your debts. Through this branch of bankruptcy, you will find relief from many types of debts, including credit card balances. If you owe money on student loans that you cannot repay, you can ask the bankruptcy court to make an exception with your case that includes discharging your student loans.
To do this, you will need to file extra paperwork with your bankruptcy case, and you will need to file a special hearing with the court to discuss this. This is called an adversary proceeding, and it is something that you must attend if you want the court to consider eliminating your student loans through your bankruptcy estate.
For the court to consider this request, you must be able to prove that you do not have the financial means, nor will you at anytime in the future, to repay the student loans. For example, if you are suffering with a major disease that will prevent you from working, you could use this as your reason for the hardship. You must have proof that you will not be able to repay the debts now or in the future if you want the court to consider this request.
Filing for bankruptcy is an option that can be quite helpful for people who have a lot of debt they cannot repay, but it is not the best route for everyone. To talk to a law firm, like O'Connor Mikita & Davidson LLC, about your case, contact a bankruptcy law firm today.Share