In most cases, student loans are not forgiven during any type of bankruptcy process, including Chapter 7 bankruptcy and Chapter 13 bankruptcy. Although in the past student loans would be forgiven during bankruptcy as long as the filer had paid their student loans for seven years, that law was changed several decades years ago.
Currently, the only way to discharge your student loans during the bankruptcy process is to prove undue hardship - that is, that repaying your student loans causes you and your dependents to live below the minimal standard of living. In most cases, undue hardship can only be proven if the person filing for bankruptcy is physically unable to work and provide for their family - and will not be able to provide for their family in the future through earning a wage. In a limited number of cases, a bankruptcy court or bankruptcy judge could discharge part of your student loan debt if you can prove that paying the entire sum would cause undue hardship for you and your family.
Although your student loans will probably not go away when you file for bankruptcy, a Chapter 13 reorganization bankruptcy can help you to possibly lower your payments or to consolidate your student loans with your other debts. With a Chapter 13 bankruptcy, you can include your student loans in your repayment plan and successfully lower the balance owed over the course of your repayment. However, the balance at the end of your repayment plan will still need to be paid.
In general, if the majority of your debt consists of student loans, bankruptcy may not be the right choice for you. However, if student loan debt is part of your larger financial difficulties, declaring bankruptcy may help you reestablish your financial stability and start fresh.
Do you know how filing Chapter 7 bankruptcy can help improve your financial situation? You have probably heard many myths about bankruptcy, such as "you will lose everything." That is definitely not the case as long as you retain the services of an experienced bankruptcy attorney.
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Unexpected medical bills can ruin your financial future. If you’ve been suffering under the stress of medical debt, there are options for relief that can keep your family at home without losing everything. Our St. Louis bankruptcy law firm has helped numerous people get rid of debt from medical bills.
Have your hours been cut back because business has been slow or, even worse, have you lost your job? Don’t know how you’re going to pay your bills? Keep a roof over your head? We can help you get your life back. Contact a St. Louis job loss lawyer at Castle Law Office today to learn how filing bankruptcy can help you after loss of employment.
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