Discharging Your Student Loans – What Are Your Options?

(Newswire.net — July 15, 2016) Boca Raton, FL — If you are thinking about trying to discharge a student loan, experts want you to be aware that bankruptcy might not be the answer.

It’s no easy task to discharge a student loan when you file for bankruptcy. However, if you can show that trying to pay this debt will place excessive hardship on you and your dependents, there is a chance you could be successful.

Once you file for bankruptcy, collections on all outstanding debts should immediately cease until either the creditor is granted special permission to begin collecting again or the bankruptcy case is settled.

The biggest challenge lies in proving “undue hardship”. If you can do this, it is possible the student loan will be completely cancelled. To prove undue hardship, the debtor must show:

• Repaying the debt would not allow the debtor and the debtor’s dependents to maintain a minimal standard of living (based on existing income and expenses) if the debt was repaid;
• These circumstances are likely to continue for a significant portion of the time the debtor would be repaying the student loans;
• The debtor has sincerely tried to repay the loans (good faith efforts)

Bankruptcy could be the best option for you if you are able to discharge your student loan debt. However, this decision should not be taken lightly, as bankruptcy can be visible on your credit report for up to 10 years and affect your ability to buy a house or a car and even gain employment. It is best to consult with legal professionals and consider the pros and cons of this decision as it will significantly impact your financial history.

If you decide against bankruptcy, there may be other options available that will enable discharge of your federal loans. However, this will completely depend on your circumstances. Possibilities include:

• Discharge based on issues identified with the school, i.e. the school closed while the student was attending or withdrew; instances of false certification; unpaid refunds to the student
• Discharge based on student disability
• Job related discharges i.e. Public Service Loan Forgiveness

To resolve defaulted federal student loans, there is a process you must undergo which includes determining the type of loan (federal or private) and identifying the involved collection agency (usually the company that sends you the statements). Finally, you will need to figure out if the debtor is even eligible for a discharge of the student loan.

Discharging a student loan is the best option for many borrowers, as it fully cancels the loan. This option is available to qualified borrowers, no matter if their loans are current, delinquent, or in default. For more information, visit www.studentloanborrowerassistance.org. 

The bottom line is this: to determine if you should proceed down the road of bankruptcy to attempt to discharge a student loan, it is recommended you consult a legal professional who can provide sound advice. Your financial future depends on it.