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Undue Hardship Discharge of Student Loans

There is no denying that the expenses of higher education in the United States are pretty high. And that is why it is imperative that you get a huge amount of student loans. The tragic part is when the student doesn’t end up being in the desired field that could have offered the necessary affluence. And when it happens to you, in no time you will find yourself buried under the huge loan and interest.

If you are dealing with a crisis like this, then come to us at Pittsburgh Bankruptcy Law Group. Our experienced Pittsburgh bankruptcy lawyer will surely help you.

Statistics of US Student Loan Debt

When included federal and private loans, the student loan debts in the United States have reached the mark of $1.6 trillion. The average amount of student loan debt per person is approximately $28,000 when they graduate after four years of school.

After the schooling, if the graduate is opting for higher education and getting loans for that, this debt will drastically increase. For example, for a medical student, the amount of student loan debt goes to $200,000. It is the same case for any other higher education program. As a result, the students become burdened with a lot of money during their college years.

If you are in a situation where there is no source of money that can help you pay this loan back and you have a long way ahead before you can actually start earning and paying the loan back, you can file for undue hardship bankruptcy so that the court will make you free from this debt. For that, you need to talk to a Pittsburgh bankruptcy lawyer.

How Undue Hardship Claim Will Work for You

Apparently, the student loan is a secured debt because of which is not dischargeable. However, in some exceptional circumstances, this is possible.

When you are filing for Chapter 7 bankruptcy, most of your debts will be discharged, especially the unsecured ones. But when it comes to the secured debts, it is not possible to wipe them off unless you file for undue hardship claim for automatic discharge of the debt.

For initiating the undue hardship claim, you need to file against the creditor first alleging that the loan amount and interest are huge and they are making it impossible to carry on with your life resulting in an undue hardship. No matter if the lender is the federal government or a private institute, you must provide the court with the proofs for undue hardship to support your claim.

For that, you will have to go through multiple legal tests for verifying your situation and the credibility of your claim. One of the most common tests in this situation will be Brunner Test. It will list these three following qualifiers:

  • Paying your student loan will make you poor below the usual standard of life
  • You have exceptional circumstances like disability or anything else that is making you unable to work
  • You have already demonstrated good faith in repaying your loan by keeping up with the monthly plan

The court will also consider the circumstances that are preventing you from earning and paying the loan in time while leading to more debts.

For more details on this, our Pittsburgh bankruptcy lawyer can help you. Come to Pittsburgh Bankruptcy Law Group today.

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