Most people know that student loans, regardless of whether it is federal or private in nature, are not dischargeable, even through bankruptcy. Nevertheless, recent studies found out that this is rather not absolute. Actually, 40 percent of debtors who filed for relief from student loans were able to have the court discharged part or the whole of the debt. The only sad thing about it is that, because of the aforementioned knowledge, less than one percent of people who have student loans while filing for bankruptcy tried getting their loans discharged as well. These are very depressing figures, since a lot of people still end up paying a lot even after receiving a discharge from the bankruptcy court.
So, if you are one of the people who are struggling because of financial problems and saddled with student loans that are impossible for you to pay, you need to do some things that would either make it easier for you or make the whole debt go away. First, you can try to get a deferment from your student loans, which will give you a certain time period to not pay your loan because of some excusable situations, like losing your job, financial instability and going back to school. Getting an excuse from paying your loan through deferment will not accrue interest during the set period of time.
Alternatively, you can get a loan forbearance instead. Through this, you can get permission from your loan holder to cease payments for a certain time frame or, at least, pay lesser amounts of money. You can avail of this route if you have poor health, have some unprecedented personal issues, lack the means of paying it within the decade or the set period for payment, or if your loan payments are taking up more than a fifth of your household's monthly income.
However, if you have already considered declaring bankruptcy in the first place, you might want to be free from the student loans altogether. Under the normal bankruptcy proceedings, student loans are, in fact, non-dischargeable. For you to be able to get relief from it, you would want to file a separate suit, known as an adversary proceeding. This is like another trial within the bankruptcy proceeding.
For the court to be able to perceive your student debts as a viable cause of €undue hardship,€ bankruptcy courts utilize the Brunner test as its primary means. Passing this test is very critical, since this will determine whether or not you will receive partial or complete discharge from the student debt. This test will need you to prove three facts in order to help your adversary petition€"first, that you do not have the capability to maintain even the most minimal standard of living not just for yourself but for your family and other dependents as well, all while in the process of paying up your student loans; second, you need to prove that there is a €certainty of hopelessness,€ that your current situation will most likely continue on; and lastly, that you tried your best in making an effort to repay these loans.
Still, a lot of bankruptcy lawyers say that proving these three conditions to the court is very hard, since most people who can afford to finance an attorney are seen as people who are not in the brink of getting thrown out into the streets, anyway. But this does not mean that having a lawyer or not will change the decision, because other conditions like chronic illnesses, an extensive unemployment history and a very low household income in the year before filing bankruptcy while paying their loans for more than five years are most likely able to satisfy the set requirements of the Brunner test. This will, in turn have their loans discharged.
However, if you are using a private lender for your student loans, you might find it very difficult to go through such process because most firms are not willing to give any room for negotiation. This is also compounded by the fact that such loans are, by nature, not dischargeable through bankruptcy. They will certainly file charges in order for the court to either allow or deny collection.
However, despite the unwillingness of private firms, if they did not pursue you after a few years, the statute of limitations on the debt you cannot pay will run out. After you first go into default, it takes seven years for it to be wiped off from your credit report. This could be seen as a final recourse because it is not a recommended route even by the most trusted bankruptcy lawyers around. Nevertheless, if your current financial situation leaves you with no other choice than this, you might want to know that your life will still continue on even after everything. Still, it is good to know that there are still circumstances where student loans can get discharged, giving you and several other people hope.
So, if you are one of the people who are struggling because of financial problems and saddled with student loans that are impossible for you to pay, you need to do some things that would either make it easier for you or make the whole debt go away. First, you can try to get a deferment from your student loans, which will give you a certain time period to not pay your loan because of some excusable situations, like losing your job, financial instability and going back to school. Getting an excuse from paying your loan through deferment will not accrue interest during the set period of time.
Alternatively, you can get a loan forbearance instead. Through this, you can get permission from your loan holder to cease payments for a certain time frame or, at least, pay lesser amounts of money. You can avail of this route if you have poor health, have some unprecedented personal issues, lack the means of paying it within the decade or the set period for payment, or if your loan payments are taking up more than a fifth of your household's monthly income.
However, if you have already considered declaring bankruptcy in the first place, you might want to be free from the student loans altogether. Under the normal bankruptcy proceedings, student loans are, in fact, non-dischargeable. For you to be able to get relief from it, you would want to file a separate suit, known as an adversary proceeding. This is like another trial within the bankruptcy proceeding.
For the court to be able to perceive your student debts as a viable cause of €undue hardship,€ bankruptcy courts utilize the Brunner test as its primary means. Passing this test is very critical, since this will determine whether or not you will receive partial or complete discharge from the student debt. This test will need you to prove three facts in order to help your adversary petition€"first, that you do not have the capability to maintain even the most minimal standard of living not just for yourself but for your family and other dependents as well, all while in the process of paying up your student loans; second, you need to prove that there is a €certainty of hopelessness,€ that your current situation will most likely continue on; and lastly, that you tried your best in making an effort to repay these loans.
Still, a lot of bankruptcy lawyers say that proving these three conditions to the court is very hard, since most people who can afford to finance an attorney are seen as people who are not in the brink of getting thrown out into the streets, anyway. But this does not mean that having a lawyer or not will change the decision, because other conditions like chronic illnesses, an extensive unemployment history and a very low household income in the year before filing bankruptcy while paying their loans for more than five years are most likely able to satisfy the set requirements of the Brunner test. This will, in turn have their loans discharged.
However, if you are using a private lender for your student loans, you might find it very difficult to go through such process because most firms are not willing to give any room for negotiation. This is also compounded by the fact that such loans are, by nature, not dischargeable through bankruptcy. They will certainly file charges in order for the court to either allow or deny collection.
However, despite the unwillingness of private firms, if they did not pursue you after a few years, the statute of limitations on the debt you cannot pay will run out. After you first go into default, it takes seven years for it to be wiped off from your credit report. This could be seen as a final recourse because it is not a recommended route even by the most trusted bankruptcy lawyers around. Nevertheless, if your current financial situation leaves you with no other choice than this, you might want to know that your life will still continue on even after everything. Still, it is good to know that there are still circumstances where student loans can get discharged, giving you and several other people hope.