Baltimore Bankruptcy Attorney: Discharging Student Loans in Bankruptcy
As you may have heard, Student Loans are notoriously hard to discharge in bankruptcy. The 2005 bankruptcy law changes require all student loans to be subjected to a higher standard in order for a debtor to obtain a discharge.
Debtors have to prove that the student loans are an undue hardship on them and their dependents as well as show a history of some payments. Debtors seeking to discharge their massive student loan debt have to file an adversary proceedings. This is a lawsuit within the bankruptcy case informing the lender and the court why they should get a discharge.
The Huffington Post has an article about a married couple who co-signed massive amounts of student loans for their children and fell on hard times. They report their experience discharging student loans. As always, facts will drive the case, but it goes to show that it can be done even without an attorney for the right debtors.
Both debtors clearly had medical problems which is often the case in situations where I have seen student loans discharged. I have come to describe the requirements as debtors have to show no hope of being fully productive members of society due to an illness or disability.
The Department of Education issued guidelines for a hardship discharge of student loans in bankruptcy in July that is helpful for borrowers considering bankruptcy. Here is the full report. Undue Hardship.
I was able to obtain a discharge of student loans just based on medical documents in the past which was a relief for my client who was petrified about having to testify about her illnesses.
If your income has being greatly reduced and there is no reasonable expectation that you can increase it in the foreseeable future you should seriously consider discharging your student loans. Typically, with an attorney, the cost of the adversary case is in addition to the bankruptcy fee, but could be well worth it relative to the amount of debt owed.
This is a brief overview of a complex topic and should not be taken as legal advice. Always consult a knowledgeable bankruptcy lawyer.