In order to discharge a student loan through bankruptcy, you must show that paying your student loan would impose an “undue hardship” to you. What is considered to be an undue hardship is decided upon by a bankruptcy judge.
The factors taken into consideration for this decision are: whether you have made a good faith effort in paying off the debt (including looking for a job and minimizing living expenses), looking closely at your budget, and looking at your prospects for paying back the student loan. Although over 300,000 people default on student loans each year, it’s estimated that less than 1,000 manage to get their loans discharged in bankruptcy.
Recently, several legal cases have been making the news in which a parent co-signed on a student loan, and the student passed away, leaving the parent with the debt. It’s especially hard to get rid of private loans, or those loans that aren’t federally subsidized. Often in that situation, the parent or other co-signer will file bankruptcy, hoping that a judge finds that the student loan is an undue hardship for the debtor.
If you are behind in your student loans and running out of options, please give my office, The Law Offices of Todd M. Friedman a call today at (877) 449-8898.