Student loans represent an enormous proportion of American consumer debt, totaling over $1.5 trillion, more than credit cards or auto loans. Graduating with tens of thousands of dollars in debt can make it impossible to get ahead or even pay basic expenses, forcing many into bankruptcy before they’ve even started building their lives. Unfortunately, student loans are ineligible for discharge in all but the most severe financial situations.

Student Loans & Bankruptcy

Federal Exemptions for Student Debt

In 2005, the federal government enacted The Bankruptcy Abuse and Consumer Protection Act, a sweeping revision of the American bankruptcy code. Among other things, this law specifically exempted student loans from discharge under Chapter 7, unless borrowers can prove that paying back their debt would incur a substantial financial hardship.

Proving Financial Hardship

To demonstrate hardship, you must show that paying back your student loans would make it impossible to maintain a minimum standard living, and that this situation isn’t expected to end soon. For instance, if you’re unable to work due to a disability or live in an impoverished area, you may successfully sue for debt relief. This extremely difficult process almost always requires the help of a bankruptcy lawyer, who will prepare the necessary evidence and argue your case in court.

How Bankruptcy Can Help

Although you normally can’t discharge your student loans directly, filing for bankruptcy protection can make the debt less burdensome. After discharging your credit cards, back taxes, and other eligible debts, you might have more room in your budget to pay back your student loans without falling behind on your rent or utilities.

For over 35 years, the bankruptcy professionals at Padgett & Robertson, Attorneys at Law have helped borrowers throughout southern Alabama recover from crushing debt. If you’re having trouble keeping your head above water because of credit card debt or student loans, their accomplished attorneys will find the best debt relief options for your situation. Visit their website to learn more about the benefits of bankruptcy or call (251) 342-0264 to reach their Mobile office and schedule a free consultation today.

No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers.

We are a debt relief agency. We help people file for Bankruptcy relief under the Bankruptcy Code.