Student loans bankruptcy – I am receiving more and more calls about student loans bankruptcy, student loans are becoming more and more troublesome for college graduates as the struggling economy as left fewer jobs for those just graduating from college and graduate school. Additionally, most students graduating college have student loans because of the rising college tuition rates and other costs associated with college such as fees, books, computers, and room and board. However, unlike other unmanageable debt, both government and private student loans are not dischargeable in bankruptcy unless you can prove substantial hardship under the very difficult Brunner test.
The Brunner test requires you to prove a substantial hardship and you need to file a law suit against the lender who made your student loan. In that suit, you must prove:
• If required to repay the loans, you could not maintain a minimal standard of living for yourself and your dependents.
• Circumstances show that this state of affairs is likely to continue for a very long time.
• You have made good faith efforts to repay the loan.
This is a very difficult standard. You may have a better chance to manage your student loans in a chapter 13 bankruptcy. A chapter 13 bankruptcy gives you the opportunity to include your student loans within a Chapter 13 payment plan. Another advantage to a chapter 13 bankruptcy is that you may be allowed to concentrate on paying the student loans by paying relatively little on your other debt.
Student Loans Bankruptcy – if you have government student loans, another repayment option available to you is called the Income Based Repayment plan. This is a relatively new program offered by the Department of Education and is only available for government student loans. Information about this repayment plan is available at http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRPlan.jsp. In general your payment for your student loan under an income based repayment plan is based on your actual income and has some other advantages if you work for a non-profit or a government agency.
If you have private student loans there is little that can be done outside a chapter 13 bankruptcy. However, there is a bright glimmer of hope. The House Judiciary Subcommittee on Commercial and Administrative Law took the first steps in reversing language in the 2005 bankruptcy law related to private student loan debt by approving the Private Student Loan Bankruptcy Fairness Act. This legislation will restore fairness in student lending by treating privately issued student loans in bankruptcy the same as other types of private debt. Under the bill, privately issued student loans will once again be dischargeable in bankruptcy.
For more information about Bankruptcy and your Student Loans – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081. Evening and Weekend hours are available to meet with an attorney. If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.