While many types of debt are dischargeable in a Chapter 7 or Chapter 13 bankruptcy, student loan debt is usually not eligible for discharge. Unfortunately, no part of your student loans are able to be discharged, no matter which chapter of bankruptcy you file. The Bankruptcy Code provides that student loan debt is one of the several non-dischargeable debts through bankruptcy. See bankruptcy law 11 U.S.C. § 523. However, there is one exception to this non-dischargeability rule: if you can prove to the court that you suffer from an “undue hardship,” you may be able to have your student loan debt discharged. This “undue hardship” usually pertains to debilitating medical conditions, but could be from a different form of hardship. Proving undue hardship can be difficult, if you need assistance with this matter it is highly recommend to retain a bankruptcy lawyer to assist you.
In bankruptcy case Brunner v. NY State Higher Educational Services, the Undue Hardship Test was established: in order to have student loan debt discharged, the debtor must prove that (1) he or she cannot maintain a “minimal standard of living”; (2) the debtor is undergoing special circumstances beyond the debtor’s control, and those conditions are likely to continue throughout the student loan repayment period; and (3) the debtor has, in good faith, tried to repay the loan. If you can satisfy all three of those requirements, a judge may declare your student loan debt as dischargeable. This is a case-by-case basis though, and the judge will look into your evidence of an undue hardship extensively. This is not an easy feat and does not happen all that often. For information about a particular student loan contact a bankruptcy law firm in your area.
Additionally, student loan payments are not considered an allowable monthly expense under the Means Test. Click this link for more information on the Chapter 7 Means Test. Student loans are often not considered in the Means Test because (1) the Bankruptcy Code does not allow it; and (2) most bankruptcy judges do not look at student loan payments as an expense this is “reasonable and necessary” for the maintenance of yourself and your dependents. If you try and include your student loan payments in your Means Test calculation, a judge will most likely kick it back for recalculation, or the inclusion of the expense may even cause you to fail the Means Test and not qualify for chapter 7. Including such payments in your Means Test calculation also establishes a “presumption of abuse,” which allows a court to dismiss your case. The Means Test can be difficult to master, especially if you have a case involving student loans. You should consult with a bankruptcy attorney for assistance with the Means Test.
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If you are having a difficult time meeting your financial obligations Florida Law Advisers may be able to help. The bankruptcy attorneys at our firm have years of experience helping people just like you to solve their financial problems and obtain a fresh start. We have many options available that can help you successfully manage your debt and regain your financial health. Regardless if you need help with Chapter 13, Chapter 7, or other debt relief, our professional legal team will provide you with competent legal advice you can trust. To see which options may be available to you, contact us to today to schedule a free, confidential consultation with a Tampa bankruptcy attorney at our firm.