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Over 45 million Americans are drowning in student loan debts. When you’re trying to keep the lights on, pay rent, and juggle your other expenses, student loan payments (and their usually high interest rates) can be truly overwhelming.
If you’re currently paying off your student loans and planning to file for bankruptcy in Raleigh, you may be wondering if they’re included in your dischargeable debts. This is a question we get a lot here at Weik Law Office.
The quick answer is no, because it’s classified as non-dischargeable debt. This means that in general, bankruptcy will not eliminate your student loans. However, there is an exception.
Student Loans and Undue Hardship
The only exception is if you can prove that continuing to pay your students loans would cause you undue hardship. If you’re able to prove this, the bankruptcy court can choose to discharge your student loan debt.
The American Bankruptcy Law Journal published an academic paper that revealed a startling finding— that as many as 40% of debtors who include their student loans when filing for bankruptcy were able to get a partial or full student loan discharge. It’s definitely not easy to get a student loan discharge, but it’s also not impossible.
Proving Undue Hardship
Different tests are used to determine undue hardship, and these also vary depending on the court. Here’s a quick look at a couple of tests the courts use:
The Brunner Test
Under this test, the court will only discharge your loans if:
- You’re proven to have made a good-faith effort to keep up on loan payments
- Continuing to pay your student loans will lead to you (and your dependents, if you have any) being unable to keep a basic standard of living or end up in poverty
- The situation will cover the majority of your student loan repayment period
Totality of Circumstances Test
Under this test, the bankruptcy court will examine all the relevant factors of your case. After deliberating, they will decide whether or not paying back your student loan debt will cause you undue hardship.
Other courts only approve an undue hardship motion in a narrow range of cases, such as a serious disability or medical hardship that hinders you from working.
Weil Law Office: Your Advocates Through Bankruptcy in Raleigh, NC
Without a doubt, the laws surrounding undue hardship tests and student loans are incredibly complex.
That’s why it’s so important to have an experienced Raleigh bankruptcy lawyer on your side to help you navigate the process. You need an expert whose only mission is to advocate for you during one of the most difficult times of your life.
Our bankruptcy lawyers at Weik Law office are experienced in all types of Chapter 7 and Chapter 13 bankruptcy. Most of all, we’re ready to fight for you and help you achieve the fresh start you deserve.
Call Weik Law Office today at 919-845-7877 for a free consultation, and set up a time to speak with one of our friendly professionals.