Student Loan Debt And Bankruptcy

Southern California Student Loan Bankruptcy Lawyers Since 1970.

Student loan debt is a nondischargeable type of debt. But, bankruptcy may still help you with student loan debt.

The Chapter 7 Bankruptcy Option.

Under Chapter 7 bankruptcy, there are certain types of debt that are automatically not dischargeable, such as the trust fund portion of an employer's payroll taxes, recent income taxes, student loans (with some exceptions), past and future alimony and child support, liability created in a driving under the influence incident, unpaid fines and penalties such as traffic tickets, and criminal restitution awards. If you have a large amount of student loan debt and are unable to make arrangements with your student loan creditors, you may want to consider Chapter 13 bankruptcy.

If the debtor can establish that repaying student loan creditors would constitute a hardship, including a mere financial hardship, the debtor can initiate a lawsuit in his or her bankruptcy proceeding seeking a determination by the Bankruptcy Court that the student loan debt is dischargeable on the basis that repayment would indeed constitute a hardship. The hardship discharge exception is fairly narrow, and the debtor's burden of proving hardship is a difficult one.

The Chapter 13 Bankruptcy Option.

In a Chapter 13 bankruptcy, the debtor proposes a payment plan to repay student loan creditors over time.

Say for example, you owe $100,000 of student loan debt. Let's also assume that the student loans are in default and you have already used up all available forbearances and deferments. The student loan lenders and/or guarantors are running out of patience and are perhaps now filing suit or enforcing a judgment against you. If you file a Chapter 13 petition, you can force the student loan lenders and/or guarantors into a payment plan of up to five years in duration at what might be a very small percentage on the dollar, during which time, as long as you are making payments pursuant to the Chapter 13 plan's terms, the student loan lenders and/or guarantors can take no action against you or your property.

At the end of the plan's terms you will receive your discharge, but since student loan lenders and/or guarantors are generally not discharged, absent a showing of hardship, you will owe the portion of the student loans that were not paid during the Chapter 13 proceeding, plus the interest which accrued during the plan's duration. Accordingly, while chapter 13 is not a permanent solution to student loan creditor pressure, it can give you a pressure-free period of up to five years.

If you are dealing with student loan debts and are considering filing bankruptcy, please contact the Law Offices Of Hagen & Hagen to discuss your options with one of our Southern California student loan bankruptcy lawyers.

The Law Offices Of Hagen & Hagen represents clients throughout Southern California, including Los Angeles County, Orange County, Riverside County, San Bernardino County, Santa Barbara County, Ventura County and San Luis Obispo County. Our Southern California student loan bankruptcy lawyers & Los Angeles debt payment arrangement attorneys see clients from all over the greater Los Angeles area, including Santa Monica, Long Beach, Anaheim, Pasadena, Orange, Huntington Beach, Newport Beach, Garden Grove, Irvine, Yorba Linda, Riverside, San Bernardino, Pomona, Torrance, Simi Valley, Mission Viejo, Ontario, Glendora, and Covina. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.