Student Loan and Bankruptcy

If I File Bankruptcy Will My Student Loans Get Discharged?
It is almost impossible to graduate from school, colleges and universities and not having a mountain of student loan debts. We all know education has become very expensive, and a professional education is most expensive in every form and shape. One cannot expect a student graduating from any professional school, and not having at least $100,000 to $200,000 debt. It is unfortunate that someone has to file bankruptcy while still having a high volume of student loan and no dependable job to pay it back. Lenders have unique ways of mushrooming this student loans by offering continuous forbearance and other deferments to student. Each forbearance and deferment just adds up more to the student loans. For those who have to repay a student loan and are considering filing for bankruptcy, the question on their mind would be if this mountain can be discharged? Again, unfortunately, the student loans are usually not discharged in the case of bankruptcy. According to Chapter 7 Bankruptcy law the only time a student loan might be discharged is if it would cause the debtor “undue hardships”. The same basic rule also applies to Chapter 13 Bankruptcy cases.
However, the requirements for discharging student loans were changed in 1998. According to these new changes, your student loan will only be discharged if the bankruptcy court is convinced that paying back the loan would bring about undue hardships for you or the people who are dependent on you. Keeping this in mind, the Federal Student Aid Ombudsman (FSAO) stated that there were three criterion that would be used to determine whether a person is eligible to have their student loan discharged or not:
1. Will repaying your student loans prevent you from maintaining a minimal standard of living?
2. Will it be difficult for you to maintain your minimal standard of living over the repayment period?
3. Did you make an effort to repay the loan before filing bankruptcy. Have you been repaying your loan for at least 5 years?
Even if you are unable to fully discharge your student loan debt by filing bankruptcy, there are many other options for dealing with student loans including deferments and cancellations. Your attorney can talk to your lender and ask them to cut down your student loan and ask for verification of these debts along with fines and penalties.
Just because it may be difficult to discharge your student loan debt, you should still discuss your case with a bankruptcy lawyer. Bankruptcy attorneys know the law and can help you get the most benefit out of filing for bankruptcy.

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