Bankruptcy and Student Loan Debt

July 10, 2012 by  Filed under: Bankruptcy 

People who are dealing with student loan debt are often advised to seek out various alternatives for paying off their burdensome loans. Because this type of debt can be very difficult to discharge in bankruptcy, it’s often advisable that those who are struggling with their payment seek creative methods for paying it off.

However, it is possible to discharge student loans through the bankruptcy process. But, you should know up front that it’s rare and a difficult process. While a bankruptcy attorney can help you, it’s largely dependent upon your financial situation and the judge who handles your case. With student loan debt being a growing problem, judges are reluctant to set a new precedent that allows this debt to be discharged, lest the flood gates be opened.

Discharging Student Loan Debt through Bankruptcy

In order to discharge your debt through bankruptcy, you must meet three basic requirements. You have to meet all three requirements to a judge’s satisfaction. The phrase “judge’s satisfaction” can be rather arbitrary, and depends upon the conditions of your unique case. However, the three requirements are as follows:

  1. You live in a state of poverty. This may be determined by the national poverty level. Or, the judge in your case could use some other form of evaluation. Also, you must live in a state of poverty with no foreseeable hope of moving up.
  2. Your financial situation seems to have stabilized. If you’re over the age of 50, and working a minimum wage job, for example, then a court is likely to rule that you have reached your wage ceiling, and that your financial situation is unlikely to change significantly.
  3. You must have shown a good faith intention to repay your debt. If you’ve been making an honest effort to repay your loan for several years, then your chances of getting it discharged goes up dramatically.

Dealing with Student Loan Debt: Alternatives

If you don’t think you’ll meet all three of these qualifications for a discharge through bankruptcy, then you might be able to get rid of your debt through some alternative methods. If you’re employed with a company that grants bonuses, try talking with your boss about getting assistance with paying off your loans. Instead of getting airline miles or a paid weekend vacation, ask for help with something that really matters: student loan debt.

Also, consider going back to school, and try to get funding. While you’re in school, your student loan debt is put on hold and you make yourself a more valuable job candidate for higher paying positions. Your employer might even pay for you to go back to school!

Don’t give up hope. The important thing to keep in mind is that student loan debt is not impossible to deal with. It may be a greater challenge than other types of debt, but you can resolve it!

Christopher M, of Lee Law Firm, understands that financial hardships can affect honest, hard-working people. His early experience growing up in a very blue collar family in a rural area of Indiana, made a significant impression on his business philosophy today. As a child, he watched his family struggle as money didn’t come easy and his parent work hard to provide for their family. As a bankruptcy attorney in Dallas, TX his practice has given him the opportunity to directly impact the lives of many people. For more information visit:

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