If you owe thousands of dollars on your student loans and are having extreme difficulties paying your minimum payments, you may want to talk to a bankruptcy lawyer about filing Chapter 7. While Chapter 7 bankruptcy does not typically allow you to discharge student loan debts, there is a chance it could. Here are three things you should know about this.
It is extremely hard to qualify for a discharge
Even if you qualify to file for Chapter 7 bankruptcy, convincing the court to discharge your student debts will not be an easy feat. Chapter 7 is a great tool for getting rid of certain debts, but there are exclusions to what it covers, and student loans are typically one of these things.
The only way you will get a discharge on your student loan debts is if the bankruptcy trustee agrees to it, and you and your attorney will have to prove that it is absolutely necessary.
How to prove you cannot repay your student loans
Proving that you cannot repay your student loans will take some work, and it will involve claiming the undue hardship exception. To earn a discharge, you will have to prove two main things:
- You are currently in a financial hardship that makes it impossible to repay the debts.
- You have no hope of ever getting out of the hardship you are going through.
For example, if you were diagnosed with a major illness and are unable to ever work again, you may be limited to a fixed income for the rest of your life. This type of hardship might be enough to convince the court to discharge the student loan debts.
What you can do if the court denies your request
To ask for a discharge on your student debts, your attorney will have to file a complaint requesting this. If the court agrees to it, your debts will be forgiven, which means you will no longer owe them. If the court denies it, you could always try contacting your lender that issued the student loans to ask for a modification. This works well in many cases, and it may help by extending the terms of your loans so your payments are lower.
If you are interested in finding out if Chapter 7 bankruptcy could help you eliminate your student loan debts, contact a bankruptcy attorney, such as Richard S. Ross - Bankruptcy Attorney, to schedule a consultation.