When you complete a Chapter 7 bankruptcy or Chapter 13 bankruptcy, you are typically permitted to discharge any remaining unsecured debts. Qualifying unsecured debts include medical debt, credit card debt, and personal loans – but not student loan debt. Contrary to popular belief, however, it is possible to eliminate student loan debt through bankruptcy under certain conditions.
If you are struggling to make ends meet, you may be able to secure a student loan discharge. Our Long Island student loan lawyer can assess your circumstances and advise whether you are likely to qualify for relief. We are compassionate to the financial difficulties many of our clients experience as a result of burdensome student loans, and our team is prepared to fight for your financial future.
If your student loan debt results in an undue hardship, Richard S. Feinsilver may be able to help. Schedule a free initial consultation by calling (516) 268-0122 or contacting us online.
Demonstrating Undue Hardship in an Adversary Proceeding
You will only be able to discharge your student loan debt if you can demonstrate having to pay it would result in “undue hardship.” The adversary proceeding is the legal mechanism through which you will have to persuade the court to allow the debt elimination.
Proving that you will experience “undue hardship” is often very challenging. Historically, bankruptcy courts are reluctant to grant these discharges, but they will consider several factors when adjudicating your case.
To prove “undue hardship” and qualify for student loan debt relief, you will need to prove that:
- You made a good faith effort to repay your loans
- Your current financial situation does not allow you to sufficiently care for yourself or your dependents
- Your current financial situation is unlikely to improve in the future
Our Long Island student loan attorney understands how the courts evaluate and decide adversary proceedings. We can help you prepare a compelling argument that demonstrates undue hardship, and our team will work diligently to secure the favorable outcome you deserve. We will always be straightforward and direct if we believe you will not qualify for a student loan discharge, but our firm is ready to help you implement other types of debt relief solutions that will allow you to obtain a fresh financial start.
We offer payment plans and offer our services in English and Spanish. Contact Richard S. Feinsilver online or call (516) 268-0122 today.
Why You Cannot Ignore Your Student Debt
If your federal student loan debt continues to grow and you foresee no practical means of paying it, you may be tempted to ignore it entirely. This is a mistake that can result in serious and damaging consequences.
When you fall at least 270 days behind on making a payment on your federal student loans, the government can garnish your wages and benefits without first securing a judgment. This means they can take a portion of your paycheck and other benefit payouts until your student loan debt has been cured. The government can also take far more of your paycheck than private creditors.
The government may also choose to file a lawsuit against you if your student loan debt goes into default. If they win, they can place a lien on your home. It is always advisable to address student loan debt before these types of consequences occur.
How Bankruptcy Can Help You Address Student Loans
Bankruptcy alone will not allow you to eliminate your student loan debt on its own. Paradoxically, however, you must file for and complete a Chapter 7 bankruptcy or Chapter 13 bankruptcy before you have the opportunity to request relief.
If you have little to no income to partially pay back creditors, you will likely qualify for Chapter 7 bankruptcy, which involves liquidating non-exempt assets. We can help you minimize the impact of liquidation. Many filers lose little to nothing.
If you do continue to have reliable disposable income, you will most likely need to file for Chapter 13 bankruptcy. This process involves committing to a repayment plan that lasts between three and five years. You will make monthly payments, the amount of which is determined by what you can currently afford.
Upon completing your Chapter 7 bankruptcy or Chapter 13 bankruptcy, you will be usually able to discharge unsecured debts. You will not be able to discharge student loan debt at this point, but you do have the opportunity to request relief through what is called an “adversary proceeding.”
An “adversary proceeding” is a type of lawsuit that seeks to reclassify your student loan debt as dischargeable. You can only file an adversary proceeding after completing Chapter 7 bankruptcy or Chapter 13 bankruptcy.
Our Long Island student loan attorney can guide you through each step of the bankruptcy process and will work to maximize all available forms of relief. We will then help prepare and file your adversary proceeding if we believe you are likely to qualify for a student loan discharge.
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