Student loan payments are a serious debt problem for thousands of Americans. The amount of student loan debt in our country exceeds the amount of credit card debt. Only the amount owed on mortgage loans exceeds student loan debt in the United States.
One of the reasons that student loan debt is a growing problem for many individuals is that student loan debt is usually not dischargeable in a bankruptcy case. Therefore, if a person files for bankruptcy relief to get a fresh start after a financial hardship, that fresh start is hampered by student loan debts. Depending on the amount of the student loan debt and the terms of the loan, a person could pay for ten or twenty years to satisfy the debt.
If you or a loved one has any questions regarding student loans, please contact Allegiant Law today. Our Anthem student loan attorney assists individuals who might qualify for a hardship discharge seek relief from that burden of student loan debt.
Chapter 7 Student Loan Hardship Discharge
It is a bankruptcy myth that student loan debt is never dischargeable. There are cases in which a debtor may qualify for a hardship discharge of student loan debt. The debtor must file a motion requesting the hardship discharge, as it is not automatic.
A New York bankruptcy judge indicated in a recent court decision that the judge refused to participate in continuing to maintain the myth that student loan debt is never discharged in bankruptcy. The judge applied the Brunner test, which is used by judges throughout the country when deciding motions for a hardship discharge of student loan debt.
The Brunner test consists of three factors for a judge to consider when deciding whether a debtor should be allowed to discharge student loan debts in a bankruptcy case.
The three factors used to determine whether you can discharge your student loan debt are:
- Standard of Living Test — The judge considers whether the debtor can maintain a minimal standard of living for the debtor and the debtor’s dependents if the debtor must continue paying the student loan payments.
- Continued Financial Status Test — The judge determines whether there is sufficient evidence to prove that the debtor’s current financial state will continue during all or a considerable portion of the repayment period of the student loan.
- Prior Payments Test — The final test reviews the student loan payment history by the debtor. The judge needs to see evidence that the debtor has made a good faith effort to repay the student loan debt.
In many cases, a debtor whose financial state is likely to continue may qualify for the hardship discharge if the debtor has been making a good faith effort to repay the student loan payments.
Becoming permanently disabled is a common reason why a person may be granted a hardship discharge for student loans. The person’s state of affairs is not likely to change because the disabling condition is permanent and prevents the person from working. Another reason may be a parent who has to give up a career to care for a disabled child or spouse because there are no other caregivers or resources to pay caregivers.
Each motion for a hardship discharge of student loans is judged based on the unique facts and circumstances of the case. Also, judges have a certain amount of discretion when applying the factors of the Brunner test because there are no standard formulas. Therefore, it can be difficult to know what a judge might decide.
Contact Our Anthem Student Loan Lawyers for More Information
If you are struggling with student loan debt, you may have several options. Our lawyers can review your loans and discover various options for repaying student loans. We can also look at bankruptcy options that might provide sufficient debt relief to handle your student loans.