How to File for Bankruptcy With Student Loans
While the general rule is that student loans are not dischargeable in bankruptcy, there are exceptions for graduates who carry especially heavy financial burdens. At Arndt Buswell & Thorn S.C. in Sparta and Bangor, WI, skilled attorneys help individuals with student loan debt find ways to lighten their loads. Below, they discuss options for relief from collections actions through bankruptcy court.
Bankruptcy Discharge for Loans
1. Undue Hardship Exception
Bankruptcy law provides an exception to the rule against discharging student loan debt. Individuals who prove that repaying their federally backed loans creates undue hardship may receive discharges. Courts often apply the Brunner Test to evaluate whether a debtor comes under the exception.
2. Elements of the Brunner Test
To meet the Brunner Test standards, you must prove that paying back your student loans would prevent you from maintaining a basic standard of living. You must also show the conditions causing the hardship will continue for a large percentage of your repayment time, and that you made a good-faith effort to repay your federal student loans.
3. Options for Relief
If the bankruptcy court decides a debtor has proved undue hardship, the court may grant a complete discharge of the debt, a partial discharge, or a restructuring of debt. In situations where debtors show they were victims of fraud, breach of contract, or other misconduct by an educational institution or lender, the bankruptcy court orders discharges or alternative relief.
The bankruptcy attorneys at Arndt Buswell & Thorn S.C. know the struggles graduates face in trying to pay student loans and other costs of living. Backed by more than 25 years of experience, they offer traditional and creative ways to guide their clients through troubled financial waters. Take the first step toward the relief you need from collections actions. Call (608) 269-1200 for their office in Sparta or (608) 486-2324 for Bangor, WI. For information about their other practice areas, including estate planning, visit them online now.
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