Student loans and bankruptcy
On behalf of Bankruptcy Law Firm of Clare Casas on Thursday, August 27, 2015.
Florida students hear it over and over again: they are saddled with their federal education loans for the rest of their lives, even if they go broke. The government wants their money, and they will stop at nothing to get it. Unfortunately, this is the case for many. But there are some circumstances in which student debt can be forgiven by filing for bankruptcy. In fact, about 40 percent of Americans who file for bankruptcy who do not even include their student debt still get it forgiven, in part or in whole.
For those in Florida who have tried and tried to pay back their student loans but simply do not have the means to, bankruptcy may be the solution. The Brunner test is a good place to start. This measures whether continuing to pay your student loans after filing for bankruptcy would cause undue hardship. While this does not lead to an automatic dismissal of the debt, as “undue hardship” is a rather ambiguous term, it is a good place to start.
The Brunner test measures three aspects. First, you must have made a good-faith attempt to pay the loans; depending on the judge, this could mean a few months to a few years of payment attempts. Second, you must be able to prove that paying the debt puts you below a minimum standard of living. Finally, and perhaps most importantly, you must show that your financial situation probably isn’t changing anytime soon.
If you fit these criteria, it may be beneficial to speak with a bankruptcy attorney to explore your options and perhaps get a fresh start financially.