Eliminate Student Debt in Bankruptcy



Eliminate Student Debt in Bankruptcy

 Are you facing student debt in bankruptcy?  If you are, there is no need to stress about it because you may be eligible to discharge your student debt.  In order to discharge your student debt, you must be able to show proof that to repay your debt would cause undue hardship, given your financial situation.  In other words, repaying student debt cannot be done and would cause a great financial burden.  Undue hardship is proven using tests such as the Brunner Test, the Totality of Circumstances Test, and other tests courts may use to prove eligibility for discharge of debt.  If undue hardship is proven, the debt may be discharged, whether it is fully or partially discharged or restructured, in which new payment terms will be set.

Eligibility Tests

 The tests used to prove undue hardship may vary between courts.  The most common test used is the Brunner Test.  To pass the Brunner Test, you must meet all of the following factors: you would go into poverty if required to pay back your student loans, your financial predicament is likely to persist during the majority of your repayment period, and you have earnestly tried to pay off your loans.  In the Totality of Circumstances Test, the court will examine all of the factors included in your bankruptcy case to decide if undue hardship would occur if you were made to pay off your student loan.  To discover what other eligibility test a court in your jurisdiction may use, ask Judge Jed Shaw, an experienced bankruptcy attorney at Shaw Defense.

Required Steps to Discharge Debt

 After it is determined you are eligible for student debt discharge, we will assist you in determining which bankruptcy to file for, Chapter 7 or Chapter 13.  Filing for Chapter 7 bankruptcy requires proof that you have some disposable income to pay debt, and with Chapter 7, you may be eligible to discharge student debt.  Although you may be able to discharge your debt, the process may take 3-5 months.  To file for Chapter 13 bankruptcy, an individual must have enough income to repay a portion of one’s debt, and if so, eligible student debt will be restructured with a payment plan lasting 3-5 years.  The final step to qualify for student debt discharge is to file an adversary proceeding petition, as this petition is required to proceed in discharging student debt in bankruptcy.

Avoid the Consequences with Shaw Defense

 Unfortunately, it can be difficult to prove undue hardship in repaying student debt.  If your debt is not discharged in Chapter 7 bankruptcy, then you will be required to repay the debt after the closure of your bankruptcy case.  In Chapter 13 bankruptcy, if undue hardship cannot be proven, you may be permitted to pay a lesser amount during the Chapter 13 plan but will be responsible for the remaining amount once the case is over.  Contact us and let us assist you in reaching a debt settlement, no matter what your bankruptcy situation entails.  Let us at Shaw Defense use our experience and skills to help you eliminate your student debt in bankruptcy and avoid unnecessary financial consequences.


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