The Low-Down on Using Bankruptcy to Pay Off Student Loan Debt

Are you struggling to pay off your student loan debt? When paired with all your other required monthly payments, do you feel like you’re drowning in debt?

This is an unfortunate situation. And given the high cost of a college education, one that’s happening all too frequently.

You may be so underwater that you’re wondering whether you can file for bankruptcy to pay off a student loan debt. The quick answer is yes – but maybe not in the way you think. This is why you need the help of experienced bankruptcy attorneys.

The Ways a Bankruptcy Attorney Can Help

Filing for bankruptcy can be complicated. Maybe you’re being threatened with wage garnishment or litigation. Perhaps you’re in default and aren’t sure how to get out of it on your own. Or it might be that you’re not in default yet but are behind on bills because paying the minimum monthly payment is out of reach.

Having an attorney well-versed in bankruptcy laws and how they apply to student loans will get you much farther than attempting to file on your own. Plus, if you’re frequently bothered by collection calls, they will cease the moment after you file for bankruptcy.

A bankruptcy lawyer will also advise as to which type of bankruptcy is right for you. You’ll likely be advised to file for either a Chapter 7 bankruptcy or Chapter 13 bankruptcy. In both cases, there are some types of debts that may be discharged and some that may not. Debts that may be discharged are debts including credit card debt, medical bills, personal and payday loans, overdue utility payments, unsecured credit lines, debts owed to landlords or those related to the repossession of vehicles, and even certain legal fees.

Student loan debt, unfortunately, is not on that list. That’s because Congress, in enacting the bankruptcy laws, decided to prohibit debtors generally from discharging student loans through either a Chapter 7 bankruptcy or Chapter 13 bankruptcy.

So Using Bankruptcy to Eliminate Student Loan Debt Isn’t an Option?

Well, not exactly.

For a very small handful of the population, student loan debt can be discharged through a process called an adversary proceeding. This process applies only to those for whom being forced to repay the loan would result in undue hardship. This route requires legal expertise to prove such hardship.

Most do not qualify for undue hardship in an adversary proceeding, however.

What most borrowers do is file for bankruptcy so that they can eradicate those unsecured debts listed above (i.e. credit card, medical bills, rent and utilities, etc.) to free up funds for their student loan payments. In other words, once you get out from under the weight of paying high-interest credit card bills or falling behind on the rent, you have money to commit to really chipping away at that student debt. And retaining skillful legal counsel throughout the bankruptcy proceedings will garner the best results and help you get a fresh start.

Financial Recovery Is Within Reach

No matter how insurmountable your student debt may seem, filing for bankruptcy with an experienced and seasoned bankruptcy attorney may be your best chance to get back on your feet in less time.

So, if you’re swimming in student loan debt and are considering starting the filing process, we strongly encourage you to contact us.

During your free initial consultation, we’ll investigate your individual case and guide you on the inside track to filing for bankruptcy so you can free up funds to pay off your student debt.