El Dorado Hills Bankruptcy Lawyer Looks at Student Loans

In filing Chapter 7, you can try to have your student loans forgiven. With Chapter 13, you are not discharging debts, as you do under Chapter 7, but you are reorganizing your finances and developing a payment plan whereby you can repay your loans. That includes your student loans.

Chapter 7 and Student Loans

Under Chapter 7, you may be able to discharge your student loans if you can show that in paying back the loan, you’ll be caused undue hardship. This is not easy to do. There are various ways to prove your case.

Basically, you usually need to show that you have made a good faith effort to repay the loan, that in your attempt to repay the loan you will not be able to maintain a minimal standard of living and that circumstances are such that you will not be able to repay the loan for an extended period of time.

The court will not automatically rule on student loans. As I tell clients in my Sacramento office, as a bankruptcy lawyer I can help them file their petition related to student loans but in most cases it is very difficult to get student loans discharged. To get a determination, an adversary proceeding must be filed.

Chapter 13 and Student Loans

Your student loans will usually not be forgiven under Chapter 13. Although, once again as with Chapter 7, they will be forgiven if you can prove undue hardship. However, Chapter 13 is granted to those who can repay their debts, so getting a student loan discharged won’t be easy.

But the good news as far as student loans and Chapter 13 are concerned is that your repayment plan, once approved by the court, determines how much you pay and not the lending institution. Thus, you can find some relief under Chapter 13.

Discharging Student Loans

A bankruptcy lawyer can help you determine what course you should take regarding any student loans you may have. I’ve found in my Sacramento practice that some people make assumptions one way or the other—that the loans will be discharged or that there’s no change they will be discharged. The fact is that you won’t know until you try.

Please contact our office in Sacramento California, serving the El Dorado Hills community at info@california-bankruptcyattorney.com or at 888-589-1977 if you have any questions regarding bankruptcy.