Louisville Kentucky Student Loan Hardship Discharge in Bankruptcy

After October 2005 both government and private student loans require a hardship discharge in bankruptcy.  Student loans can be discharged in Bankruptcy.  Learn how to qualify for student loan hardship discharges in bankruptcy.    

Yes student loans can be bankrupted if you qualify but it is very difficult.  The old rule was that Student loans could be bankrupted when they became 7 years old.  However student loan bankruptcy rules changed in just 3 days on 10-8 1998.  On 10-6-1998 it was passed signed on 10-7 and went into effect on 10-8.   Now student loans can only be discharged in bankruptcy if you prove that repaying the loan is a hardship to you or your family.  Here is the rule.  In most jurisdictions there is a 3 factor Brunner Bankruptcy test to see if you can discharge student loans.  You almost always qualify if you are at the poverty income level of income.  Here are the questions and the documents that you may be asked to provide if you want to attempt a hardship discharge.  You must also have exhausted all other ways.  This now includes applying for a income contingent loan with the Ford loan program.   

The Brunner bankruptcy test requires that first, the student loan Debtor cannot maintain, based on current income and expenses, a "minimal" standard of income for himself and his dependants if he repays the student loans.  Second, that these circumstances will persist for a significant remainder of the student loan repayment period. And third, that the debtor has made a good faith effort to repay the student loans. 

It will often be argued that you could have consolidated you loan with the Ford Student Loan Program which bases your payments on your income and discharges your student loan upon reaching age 60 or after 20 years.  You must apply for this loan prior to attempting a hardship discharge.   HEAL student  loans require a more difficult standard of shocking the consciousness.  

The Bankruptcy Manual discusses student loans and hardship discharge.  Download your free copy.   The Bankruptcy manual is for informational purposes only. The Bankruptcy Manual comes in rtf format for word or wordperfect, pdf for adobe, or you can download the audio.

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