Bankruptcy – CAN I DISCHARGE STUDENT LOANS?
Student loans can be discharged in bankruptcy under special circumstances, however, the process is difficult and expensive. Like many other courts, Kansas follows a Brunner test, to determine if you can show that repayment of student loans would cause you undue hardship. Under the Brunner test, there are three factors to determine if your student loans are dischargeable:
Based upon your financial situation today, the repayment of student loans would mean that you are unable to maintain a minimal standard of living;
Your financial situation is unlikely to change not only in the near future but for the duration of the repayment of your student loans;
You have made a good faith effort to repay your student loans.
Most Courts are reluctant to discharge student loans and the cost of litigation is sometimes prohibitive for people in bankruptcy. Due to the fact-specific nature of the litigation and expectation that the Federal Government will always litigate student loan dischargeability, you attorney fees could easily be 3 to 4 times as much as in a normal bankruptcy case. As of right now, there is no simple path to dischargeability and there are lots of hurdles to jump in order to succeed.
The court does not have to adopt an all or nothing approach in determining student loan dischargeability. The court could find that some, all, or none of the student loan debt is discharged. The success rate of these kinds of cases has hovered around 50% in the last decade. This means that in half the cases the debtor pays to litigate the dischargeability of the student loans, incurring the attorney fees, but does not get the student loan debt discharged.
Because of the uncertainty surrounding dischargeability of student loan claims in the bankruptcy court many debtors seek other avenues of dealing with student loan debt outside of bankruptcy.
There are several programs that are available for individuals who took out a federal student loan. Some of those programs adjust your repayment amounts based on your actual income and household size. For more information on programs such as Pay As You Earn Repayment Plan, Income Based Repayment Plan and Income-Contingent Repayment Plan check out Federal Student Aid website.
Remember that every situation is unique and that if you are struggling with debt, including student loan debt, a consultation with an experienced bankruptcy attorney might provide you with the necessary information to determine a plan of action to deal with debt.
At Coons & Crump, our lawyers are knowledgeable and supportive. Our goal is for our clients to make informed decisions about their finances and to experience the relief that a properly filed bankruptcy can provide. For a free, confidential consultation, call today. Filing bankruptcy can go a long way in relieving some of the stress that you are experiencing.
Kansas Bankruptcy Attorneys