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Can bankruptcy help people struggling with student loan debt?

On Behalf of | Nov 16, 2020 | Bankruptcy

Student loans, millions of people — many right here in Georgia — have them and are unable to pay back what they owe. What can they do? Long has it been believed that student loan debt does not qualify for discharge through bankruptcy. That is not necessarily true. It just doesn’t happen often.

There are documented cases of courts ruling to erase student debt in personal bankruptcy filings. These cases are few and far between, but they do exist. There might be more, but too many people believe bankruptcy is not an option for this type of debt so few try. Lenders help perpetuate this myth as they can get more through settling or extending payment terms than they can if the court agrees to wipe out the debt.

2 possible ways to discharge student loan debt

According to a recently published article, there are two ways in which you may achieve student loan debt discharge. The first is by claiming the loan was not an educational benefit. The second is by claiming the debt has caused you undue hardship. The latter argument is more likely to have positive results. However, it can take a lot to prove it.

If the court rules to deny student loan debt discharge

If you try to have a court rule to discharge your student loan debt and the request fails to receive approval, it does not mean bankruptcy is not an option for you. You may be able to have other debts discharged or have an affordable repayment plan put in place. Through Chapter 7 bankruptcy, the following are a few debts that may qualify for discharge:

  • Medical bills
  • Credit card bills
  • Auto loans
  • Revolving charge accounts
  • Certain tax debt
  • Past-due utility bills
  • Personal loans

If Chapter 13 bankruptcy is a better fit for you, debts are not immediately discharged. Instead, a repayment schedule that lasts three to five years will be set up. Only after it ends will remaining qualifying debts be discharged.

Fight for relief

Achieving debt relief, particularly if you struggle with student loans, can be a challenge. If you want relief, you have to fight for it. Thankfully, that is a fight you do not have to handle on your own. With the right help in your corner, you can attempt to have your student loan debts discharged or find other ways to lighten your financial load so you can make your student loan payments.