Many people who have gone to college have found it to be an enriching, fulfilling experience. Unfortunately, for many people in California and across the country, it was also an expensive one, resulting in student loan debt. This debt can be overwhelming, especially when combined with an illness or physical disability that could prevent someone from working in the profession for which they trained, for example. Though many people know of the benefit of seeking a clean financial slate through filing for bankruptcy, most are unaware of the possibility of having student loans discharged.
Unfortunately, student loans can be a person’s most significant debt. Though they are not discharged through the traditional process of seeking bankruptcy protection, there are some options, specifically if it can be proved that the debt creates an undue hardship. For example, the Federal Student Aid website run by the U.S. Department of Education explains that a separate lawsuit, termed an adversary proceeding, must be filed. As part of that process, a written complaint explaining the hardship created by the loans.
The case will be heard in the bankruptcy court. There are several factors that the court will considered such as whether the debtor can maintain a minimum standard of living while paying the debt, whether the person made an effort to pay the debt prior to requesting bankruptcy protection, and whether the debt will create hardship for a large part of the repayment period. There are several potential outcomes of a request to have student loans discharged:
- A full discharge
- A partial discharge
- No discharge
- A reduction in the interest rate
As with many things involving legal proceedings, a person seeking bankruptcy protection has the option of filing on his or her own behalf. However, the process can seem overwhelming, making many people want an experienced attorney on their side. Such a professional can ensure that those struggling with overwhelming debt fully understands all of the options available to them.