Higher education is an important part of many young people’s future, but unfortunately, the costs associated with it have become a heavy burden. Increasing tuition costs and additional education-related costs lead to skyrocketing student loan amounts, and many people who are struggling to pay these debts are looking for solutions.
While using bankruptcy as student loan debt relief is only possible a small percentage of the time, we at Utah Bankruptcy are here to help you at least learn what options are available to you. Here are some basics on student loans and bankruptcy.
Student Loans and Discharging
Student loan debt now exceeds credit card debt as the country’s largest single financial obligation, and some economists are even suggesting that it could trigger the next major financial bubble. The current status of student loans is that they are not dischargeable – meaning they cannot be remedied by bankruptcy – but legislators are exploring ways to change this.
While student loan debt cannot be directly wiped away using bankruptcy, at least in the immediate term, bankruptcy itself can still be a viable solution for overall debt management.
There are a couple things to consider when it comes to the current status of student loan debts and bankruptcy. You may have more of a chance than you might think. Here are a couple basic notes:
- Courts: More and more often in the last few years, courts have begun to make exceptions when it comes to student loan debt being non-dischargeable. This usually relates to hardship situations featuring both the debt holder and any dependents.
- Proving hardship: To prove this hardship, a test called a Brunner test is generally done. This test has to show the following: A minimum standard of living cannot be maintained, there are additional circumstances that complicate ability to repay, and the debtor has made good faith attempts to repay the student loan.
As we noted, this landscape is quickly changing. If you’re struggling with student loan debt, keep a careful ear to the ground for future developments here.
For more on student loan debt, or to learn how our bankruptcy attorney can help with any of your major debt, contact Utah Bankruptcy today.