Can Bankruptcy Cover Student Loans?

Student loans are NOT generally covered by Bankruptcy. There may be other alternatives that can relieve this debt though, as explained by a Miami-Dade bankruptcy attorney.

With the ongoing economic struggles our country is facing, many college graduates are left to wonder how they will ever pay off their debt. It is even worse for those who can’t find jobs. This leads a lot of people to search for ways to get out from under hefty student loans. A Miami-Dade County bankruptcy attorney can offer guidance as to your next steps.

Is Bankruptcy the Way to Get Rid of My Student Loan?

One way that debt can be relieved is through bankruptcy, something that some college students consider. Bankruptcy, however, may not be the answer, as it does not generally discharge student loans.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 prevents federal and private student loans from being discharged in bankruptcy. Yet there are a couple of ways that you may get through this situation.

One is through automatic stay, also known as temporary relief. Even if your student loan can’t be discharged, if you do file bankruptcy all attempts on collection are temporarily stopped.

During this time, you may be able to work out something with the lender, or you could try and find a way to catch up on what you owe. At the very least it gives you a little time to find a solution instead of being bombarded with lender and collection calls.

Another way you may be able to deal with your student loan is to apply for a discharge based on undue hardship. While it is not easy to obtain this discharge, it may be beneficial to speak with a lawyer about the possibility.

An undue hardship goes beyond having temporary financial problems. There are considerations that come into play such as whether or not you have at least made an effort to pay on your loan. Failing to notify your lender of your financial difficulties and choosing not to make payments will not look favorable.

Undue hardship also considers whether your financial status is unlikely to change. If you have a 5 year loan and it is found that nothing will change during that time, it may be considered a hardship.

Another consideration is whether you will be able to maintain a minimal standard of living in your current financial situation if you must also pay down your loan. There may be other factors that are also looked at when determining undue hardship.

Other Alternatives with Your Student Loan Debt

There may be other alternatives that can help with your student loan. One is a student loan cancellation where extreme circumstances such as a disability or death may allow forgiveness of your debt.

Another is consolidation. If you have several loans, consolidating them into one can potentially lower your monthly payment. Or you may ask for a temporary deferment on your loan payments, without receiving a penalty, if you are unemployed.

When you feel saddled down by debt, it can cause a significant amount of stress and worry. Not knowing what options are available can make the situation worse for you and your family, which is why it would be in your best interest to consult with a Miami bankruptcy attorney.

If you have student loan debt, contact the team of bankruptcy attorneys at The Neustein Law Group, P.A. We serve residents of the Miami-Dade County, Broward County, Palm Beach County, and other areas throughout the State of Florida. We may be able to help you fight for a discharge of your student loan or find other ways to relieve your financial struggles. No matter what type of debt you have, we can help you determine if bankruptcy is right for you. Contact us today – 305-531-2545 (Direct) or 888-400-ATTY (2889) (Toll Free).