Student Loans and Bankruptcy in Pennsylvania
The expenses of education in the USA are pretty high. Hence, people are always forced to get a student loan to sponsor the education of their children. Now if you are a student dealing with a student loan as well as other huge loans or bills, then filing for bankruptcy can offer you some relief. Bankruptcy in general cannot eliminate a student loan except some special circumstances when you have to meet strict criteria. Connecting our Pittsburgh bankruptcy lawyer will help you understand more.The Effect of Bankruptcy on Student Loan
Getting a college degree can open many gates for a student. Now, there is no denying that the degree and the course a student might be pursuing can be extremely expensive too. And that is why taking care of a student loan for a long time can be a huge burden for many. In Pennsylvania, a student has to pay the highest average student loan in the country. So, it comes as no surprise that students are looking for ways to decrease the money they owe for paying the student loan by filing bankruptcy. Now, the question is that if a student loan can be discharged or not with bankruptcy.Chapter 13 Bankruptcy and Student Loan
When you are filing for Chapter 13 bankruptcy, you are getting a repayment plan that will allow you to pay the debt according to the court-approved plan. This will last up to three to five years and it will depend on your disposable income. The payment will include your debts according to the priority. Once the debts are taken care of you will get a discharge.
Unfortunately, the student loan is a non-dischargeable debt and it has to be taken care of even if you are filing for bankruptcy. However, in rare cases, where the debtor is filing for a hardship discharge, the student loan can be discharged with bankruptcy.Hardship Discharge Filing
You have to go through the Brunner Test to qualify for the hardship discharge. There will be there criteria that will include:
Paying off your student loan becomes the reason for hardship maintaining your basic standard of living, keeping all your expenses and income in consideration.
There is no chance of changing your financial situation.
You have sincerely tried to pay off the debt best according to your financial ability.Chapter 7 Bankruptcy and Student Loan
Chapter 7 bankruptcy is the most common type of bankruptcy filing in the United States. And when you are filing for Chapter 7 bankruptcy, all your unsecured debts will be wiped off and your non-exempt assets will be liquidated for paying that off. However, student loans, being the secured debt, cannot get wiped off. However, as you will be free from other debts, it will be easier for you to pay your student loans. If it is still difficult, you can apply for a hardship discharge.
For more details of bankruptcy on the student loan, get in touch with us at Pittsburgh Bankruptcy Law Group. Our Pittsburgh bankruptcy lawyer will help you with all the necessary information.