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Can I Discharge My Student Loans in Bankruptcy?

Posted on in Bankruptcy

According to the organization American Student Assistance, some 20 million individuals are entering college every single year. Of that group, 60% are borrowing to finance some or all of the cost of higher education. The average amount of loan debt per student? Across all age groups, that number sits at $24, 301. It's not surprising that one of the leading questions surrounding bankruptcy is whether or not student loan debt can be discharged. Speaking with an attorney can help to answer your personal questions about bankruptcy in greater detail.

For young individuals making their way into the working world or those who are entering a university later in life, the student loan payments post-graduation can be staggering. If graduates are not able to secure a job with sufficient pay to meet those monthly loan payments, it can be completely overwhelming and stressful. Many individuals turn towards financing their personal lives in order to meet the loan payment, using credit cards to purchase groceries and other necessities.

Although is it possible to discharge student loan debt through bankruptcy, it can be extremely difficult to do so. A person must be able to demonstrate that the student loans cause the borrower an “undue hardship”. Generally, courts use the “Brunner test” to determine whether an undue hardship exists. In this scenario, a financial evaluation would have to reveal that the debtor would be unable to maintain a minimal standard of living if he or she was forced to repay the loans.

Additionally, the borrower must be able to demonstrate that this hardship would exist for the majority of the student loan repayment period. If the court finds that a hardship does exist, all of your student loan debt may be canceled. In order to best prepare your case for an undue hardship claim, you need to speak with a licensed Illinois bankruptcy attorney for a complete evaluation.

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