Student Loans and Bankruptcy
The cost of higher education continues to climb out of control. For most individuals, the only way to finance their education is through student loans. Ironically, the promise a college education offers is quickly swallowed by the burden of mounting student loan debt. To make matters worse, student loan debt is not automatically discharged in bankruptcy.
Even though student loans are not dischargeable for most, bankruptcy may still be a good option. Contact us at 920-659-5606 and speak with Wisconsin bankruptcy attorney Timothy J. Helbing to discuss what options you have under current bankruptcy law.
Discharge Of Student Loans Requires Undue Hardship
Bankruptcy law requires a debtor to prove that their student loans impose an undue hardship on them and their family because of the inability to maintain a “minimal” standard of living. Additionally, the debtor must show they have made a good faith effort to repay their student loans, but their situation is unlikely to change for a significant portion of the repayment period. Because of these requirements, student loans are difficult to discharge.
Because of the difficulty of obtaining a discharge, Chapter 13 bankruptcy is an extremely good alternative. In Chapter 13, a debtor may be able to structure a repayment plan where the student loans are the only debt repaid in the Chapter 13 plan. Upon a successful plan completion, you will still owe the remainder of your student loans; however, your other debt will have been discharged.