This is a complicated area of the law. You will hear many people tell you that you can’t discharge a student loan in bankruptcy — and they are right! But, as always, that’s not the end of the story. You should talk to a St. Louis Bankruptcy Lawyer to discuss your options in depth, but here is an overview.
Unfortunately, the bankruptcy code does not allow you to discharge a student loan in bankruptcy unless you can show an “undue hardship.” Now what does that mean? The courts have not been entirely consistent on this, but, suffice it to say, having some financial struggles isn’t, in and of itself, enough. In fact, the process for discharging a student loan is very difficult, time consuming, and, yes, expensive. As such, without a dire situation that is entirely unusual, you probably won’t be able to even think about this approach. A St. Louis Bankruptcy Lawyer can give you some guidance here, but in almost 100% of cases, you won’t be able to discharge the student loan.
However, you may be able to use a Chapter 13 Bankruptcy to help you stop collections on your student loan. In a Chapter 13, you are forcing your creditors into a court-supervised repayment plan for three to five years. In this type of bankruptcy, you enter into a repayment plan that is based on several factors. However, you generally will not be expected to repay more than you can afford. So you can still get a discharge of other debts after making some affordable monthly payments.
Of course, you will not be able to obtain a discharge on student loan debts under almost all circumstances, and you probably won’t have the income necessary to pay off all of your loans inside of the bankruptcy plan. But a Chapter 13 Bankruptcy can buy you time and allow you to get yourself on a better financial footing so that, at the end of the case, you can afford to enter into repayment on these loans. You should talk to a St. Louis Bankruptcy Lawyer to discuss this.
If you have other debts, you may already be looking at doing a Chapter 7 Bankruptcy, but, as you already know, that form of bankruptcy will do little or nothing to stop your student loans. While it is true that a Chapter 7 will stop collections for about three months, that probably won’t be enough to give you the time to recuperate financially. A Chapter 13 could be a great option to get rid of other debts and prevent student loans from coming after you.
So, even though you can’t “get rid of” the student loans in bankruptcy, you can certainly find ways to deal with them in a way that, with some good planning, will help you rehabilitate your finances and be better-off to deal with the student loans down the road. A talk to a St. Louis Bankruptcy Lawyer can help you make a good decision.
If you are struggling with student loans, you can go here for some helpful information.
Call a St. Louis Bankruptcy Lawyer today at 314-827-4027.
Sean C. Paul
St. Louis Bankruptcy Lawyer
8917 Gravois Road
St. Louis MO 63123