The amount of government funding for post-secondary education in the United States has decreased over the past few years.Many graduates are still looking for good jobs years after graduating.If you are a young adult with a lot of student debt, you may be able to file for bankruptcy.
Step 1: Determine if you can file for bankruptcy.
There is a myth that student loans are not dischargeable.According to a study, as many as 40% of people who include their student loans in their case saw their loans decrease or be forgiven.Student loans can't be discharged in US bankruptcy proceedings unless they cause "undue hardship" on the debtor.The Brunner standard is used to prove "undue hardship" by student loans.If you repay your loans, you will be unable to maintain a minimal standard of living for you and your family.The financial circumstances that led to you being unable to afford your student loans are likely to continue through the remainder of your repayment term.Good faith efforts have been made to repay your student loans.
Step 2: Consider the consequences if you file for bankruptcy.
The decision should not be taken lightly.It will be a long and expensive process that will require you to build credit from scratch and may require the seizure of some of your assets by the court.If your loans are privately funded, you should try everything else in your power to get a better deal before you file for bankruptcy.
Step 3: You can estimate the cost of filing for bankruptcy.
The legal fees may add up to a significant amount if the process is not worth it.Having student loans discharged involves a more complicated and expensive type of legal procedure than a standard bankruptcy filing, so be sure to research expected fees before deciding on any course of action.
Step 4: There are various government programs for student loan borrowers.
All of your options should be considered before you make a decision.Most debtors should be able to repay their loans in a manageable way with the help of these programs.If you have too much medical bills to pay with your loans, you should file for bankruptcy.
Step 5: There is a bankruptcy lawyer in your area.
If you are convinced that you can discharge your student loans through bankruptcy and are prepared for the consequences, request a consultation with a bankruptcy lawyer.The lawyer will be able to confirm whether or not you are eligible for this type of filing and will guide you through the rest of the process.Getting your student loans discharged through bankruptcy involves a complicated process known as an adversary proceeding.Legal counsel have to navigate successfully in this process, which is more involved and legally advanced than a standard bankruptcy proceeding.Make sure your lawyer is familiar with this case.Look for an experienced attorney.These lawyers are more successful in getting student debt lowered or forgiven.
Step 6: Decide whether or not to proceed with the filing.
You now have more information on which to make a decision, based on the advice of the attorney and their estimated fee.Make sure you have exhausted all the other options before making a decision.
Step 7: You need to be sure that you are filing for Chapter 7.
Student loans can be forgiven if you file for Chapter 7.Chapter 13 bankruptcy will not give you full forgiveness of your loans, but it will lower your payments for a few years.Discuss the differences between the two with your lawyer.There is more information on the difference between chapter 7 and chapter 13 bankruptcy.
Step 8: To complete the process, you need to work with your attorney.
This type of loan discharge is an incredibly complicated legal process that will vary from case to case.In all cases, you will have to submit documents that list all of your assets and debts to the court, so be sure to organize the relevant paperwork.For more information on the general process, see how to file for chapter 7 bankruptcy.