These three circumstances may provide grounds for discharging your student loan debt
Most student loans are very difficult to discharge in a bankruptcy, unlike your typical unsecured debt such as credit card debt, which can be easily wiped away in Chapter 7 bankruptcy. However, there are a few circumstances that make it easier to successfully petition for the discharge of private and/or federal student loan debt. If your California bankruptcy attorney can help you prove one of more of the following circumstances, you just may be able to escape your crushing student loan debt and get a fairer shot at a healthy financial future.
Undue Hardship
Most people do realize that student loan debt can be forgiven in cases of undue hardship. However, they may not try to take advantage of this possibility because undue hardship is considered difficult to prove. Basically, your attorney will need to help you document your income and expenses and prove that the loan burden is making it impossible for you to maintain a minimal standard of living. You have a better chance of successfully filing for bankruptcy based on undue hardship if your financial hardship stems from a medical condition or disability that renders you unable to work for an extended period of time. For example, in one case from a study done on bankruptcies involving federal student loans in 2012, the debtor was able to get over $130,000 in student loans discharged due to their leukemia diagnosis and worsening medical condition.
Ineligible Educational Institution
If you secured a private student loan but did not attend an eligible educational institution, you may be able to get your debt discharged. To be considered an eligible institution, a school must by accredited under Title IV of the Higher Education Act. You can search for your school’s name on the list of eligible schools maintained by the Department of Education. While most community colleges and vocational schools will appear on the list, some shorter unaccredited training programs such as flight schools, culinary schools, and leadership training or coaching schools may not. If your school isn’t on the list, you can get your debt discharged.
Unqualified Expenses
Private student loans must be used for qualified higher education expenses such as tuition, books, supplies, and required equipment. Room and board is only a qualified expense if you are enrolled at least half time. If you received student loan funds to cover room and board when enrolled less than half time, or if you received funds for unqualified expenses like school sponsored travel or discretionary costs like intramural sports or sorority/fraternity fees, you may be able to get some of your debt discharged.
Ask a Bankruptcy Attorney for Help
If you think you may qualify for any of the above special circumstances, meet with a bankruptcy attorney right away!
