Discharging student loans in bankruptcy.

Discharging Student Loans Bankruptcy - If are wondering about discharging student loans, bankruptcy is only an option if you can prove that repaying the loan will create an undue hardship on yourself or your family (or both). Prior to 1998 the bankruptcy law allowed a clause for discharging student loans bankruptcy if you have been paying on the loan for 7 years. However, this law has changed and now discharging student loans bankruptcy laws require hardship. You will also find that many courts have allowed for discharging part of the student loan due to hardships, rather then actually discharging the whole student loan.

When applied to discharging student loans bankruptcy, hardship means that you will be unable to provide a minimum standard of living for yourself and your dependents if you have to repay the student loan. This may be due to loss of employment, illness, or emergencies arising that make it impossible to pay back your student loan in a timely manner. If you are steadily employed, however, you’ll probably find that a chapter 13 bankruptcy will provide you the means to pay back your student loan without having to discharge it.

Chapter 13 can provide a way to fix any defaults on student loans, or to pay them off over the course of the plan. Discharging student loans through chapter 13 bankruptcy requires that all of the preconditions have been met (e.g. paying the loan back will present a hardship) and that a plan is set up to pay back the student loan through a new payment plan. This will allow you to get rid of all the accrued interest charges on your defaulted student loans.

While discharging student loans through bankruptcy isn’t always a viable solution, it doesn’t hurt to check into it. To find out whether or not discharging your student loan through bankruptcy is a possible alternative for you, you should seek the assistance of a CPA or lawyer, who will go over with you your present financial situation to see if discharging your student loan through bankruptcy is a viable solution for you. Your lawyer or attorney will also be able to help you find other solution if discharging student loans bankruptcy is not viable in your circumstance.

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