Traditionally, Americans filing for bankruptcy have not been able to receive debt relief for student loans. According to bankruptcy laws, debt that was incurred in order to receive an educational benefit cannot be included as part of the bankruptcy proceedings.
However, according to an article published in the Wall Street Journal, new interpretations of vague wordings within the law are providing some borrowers with debt relief.
So what changed? How does the law read?
This challenging form of debt relief becomes a possibility under the following circumstances:
- The loan in question must be a private student loan. Less than 10 percent of all student loans issued are private loans. The majority are federal student loans, which would not be applicable for discharge under current bankruptcy laws.
- An attorney must prove that the loan in question was not used for an educational benefit. For example, some borrowers have won cases in court in which the loan was obtained in order to prepare for an exam or to attend an institution that was not accredited.
- The attorney must be able to argue that the legal definition of a student loan does not apply to the loan that the borrower wishes to cancel through the bankruptcy proceedings. The attorney’s ability to convey this argument is critical to the overall success of the borrower’s lawsuit.
Very narrow rules for getting student loans eliminated through bankruptcy
Generally, an individual is not going to receive debt relief from their student loans by filing for bankruptcy. The only situations in which people are successful is in cases in which the financial hardship faced by the individual is extreme, and student loan debt relief is absolutely essential. This is discouraging news to many American borrowers, as student loan debt is common amongst the majority of people and can become quite burdensome over the course of time.
However, the article notes that there are an increasing number of lawsuits that are making student loan debt relief through bankruptcy possible. Anyone who is facing an insurmountable amount of debt should contact a lawyer who specializes in debt relief and bankruptcy proceedings. With bankruptcy, in particular, each situation is completely unique and your attorney will evaluate your circumstances before creating a legal plan of action to help you move forward.
The following are benefits to consider when deciding whether you need to hire a a lawyer to represent you in bankruptcy court:
- An attorney who specializes in Florida bankruptcy law will understand the complexities of bankruptcy proceedings. Your attorney will know which chapter you should select as you file and also can assist you in properly using exemptions to your advantage.
- Your attorney will use a variety of personal factors, including your assets as well as your marital and family status, in order to determine the best course of action for your situation.
- Your bankruptcy lawyer will help you understand what the end results of the proceedings will be. This will give you the guidance and assurance you need in order to make the best decision for yourself and for your family.
Your bankruptcy lawyer should do more than just fill out the forms
Facing the possibility of bankruptcy is both stressful and painful. It’s important to work with a qualified professional who can provide you with accurate information and assist you during this challenging moment in your life. An attorney who specializes in bankruptcy law understands the complex nature of the circumstances, and will work tirelessly in order to provide you with the results that allow you to move forward in life.
If you think you may have some types of student loans that qualify for elimination through bankruptcy, you owe it to yourself to learn more. Contact our law firm today in order to set up a consultation with one of our experienced attorneys.