Student Loan Debt And Bankruptcy

Southern California Bankruptcy Law Firm Since 1970

Student loan debt is a nondischargeable type of debt. But bankruptcy may still be a viable option.

To learn about more about filing bankruptcy and minimizing student loan pressure, contact the Law Offices Of Hagen & Hagen in Woodland Hills, California. Certified bankruptcy attorney Jeffrey Hagen does not negotiate with lenders to reduce your payments, but he will help you achieve debt relief through the bankruptcy process.

The Chapter 7 Bankruptcy Option

Under Chapter 7 bankruptcy, certain types of debt are automatically nondischarable, including student loans. However, there are some exceptions to this rule.

If you can establish that repaying student loan creditors would constitute a hardship, even a mere financial hardship, you can initiate a lawsuit in your bankruptcy proceeding, seeking to discharge your student loan debt. The Bankruptcy Court must determine that the student loan debt is dischargeable on the basis that repayment would constitute a hardship.

The hardship discharge exception is fairly narrow; the debtor's burden of proving hardship is a difficult one. As a result, 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.

The Chapter 13 Bankruptcy Option

In a Chapter 13 bankruptcy, the debtor proposes a payment plan to repay student loan creditors over time. While it 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 have student loan debt and have already used all available forbearances and deferments, student loan lenders and/or guarantors may file suit or enforce a judgment against you. By filing a Chapter 13 petition, you can force the student loan lenders and/or guarantors into a payment plan of up to five years. During this time, you will pay a small percentage on the dollar toward your student loans. As long as you are making payments according to the Chapter 13 plan's terms, student loan lenders and/or guarantors cannot take 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, you will owe the portion of the student loans that were not paid during the Chapter 13 proceeding, plus the interest that accrued during the plan's duration.

Contact Our Offices

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 a Southern California student loan bankruptcy attorney.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.