Drowning in Student Loan Debt? Veitengruber Law Can Help.

11696993404_4fc1391647Image courtesy of Lending Memo

For millions of Americans, repaying their educational loans has become nigh on impossible. As we’ve previously discussed, the steadily increasing student loan delinquency rates have resulted in a nationwide debt of around a trillion dollars.

The harsh outlook in the current job market has only very slightly improved over the past six months. If you’re one of the many people without a job, or with a job that just doesn’t pay well enough, it probably doesn’t help to know that you’re not alone.

Most likely you’ve already run through your options in your head more times than you can count. Knowing that it’s difficult to have student loans discharged in a bankruptcy is a really frustrating fact for those who’ve reached out for financial help. It can be extremely disheartening to feel like there’s no relief available!

Undue Hardship

While it may be challenging to get any student debt relief through a Chapter 7 bankruptcy, it has been done. However, in order to have student loans discharged, you’ll need to prove to the bankruptcy court that you’re suffering what is referred to as undue hardship.

Although your first reaction to this information may be celebratory (because of course you’re dealing with hardship if you’re considering filing for bankruptcy!), hold the confetti for just a moment.

In a bankruptcy setting, the term ‘undue hardship’ has a legal definition, due to Brunner v. New York State Higher Education Services, 831 F.2d 395 (2nd Cir. 1987). You’ll have to prove that you’ll never be able to repay the loan(s), and that you’ve tried, but failed to do so. The aforementioned court case brought about a three step test that decides whether you’re experiencing true undue hardship:

  1. being completely unable to maintain even the most minimal standard of living for yourself and your family,
  2. this inability to maintain a minimum standard of living must continue for a significant period of time (and you’ll have to prove that it will, and why)
  3. having made at least a decent effort to try repaying your student loan debt, even if you were paying less than the minimum due each month

Additionally, you’ll have to be employed to the maximum level that you reached by getting, what else? Your college degree! Alternatively, you’ll need to show the court that you are permanently disabled in such a way that it prevents you from ever having the ability to reach your full earning potential.

Now, if you’re hanging your head because you’ve realized that you don’t meet one or more of the three steps in the ‘undue hardship’ assessment, that does not mean that there’s nothing you can do about your student loans.

Treading water is one thing, but if you’re going under – you DO have options. Some of these options include: Filing for a Chapter 13 repayment plan, debt reorganization, principle reduction, and more. Best of all, the lender cannot harass you throughout the length of your Chapter 13 plan, if you should choose that option. That means you’ll have several years (typically 3-5) wherein you will not have to make payments on student loans. The reorganization plan you’ll be left with will leave you in a much better position all around once you are required to start making payments again.

Need help now and want a free consultation? Fill out this simple contact form, like our Facebook page, and you’re well on your way to breaking the surface.

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7 Responses to Drowning in Student Loan Debt? Veitengruber Law Can Help.

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