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Get the Facts About How Chapter 7 Could Affect Your Student Loan Repayment Plan

Unlike normal unsecured debt like credit card debt, which may be easily discharged in Chapter 7 bankruptcy, most college loans are extremely difficult to discharge. However, there are a few scenarios in which petitioning for the discharge of private and/or federal student loan debt is simpler.

If your California bankruptcy attorney can help you show one or more of the following situations, you may be able to get out of your crippling student loan debt and have a better chance at a financially stable future. Contact The Law Offices of Paul Y. Lee at 951-755-1000 to get started.

Excessive hardship

Most individuals are aware that student loan debt can be forgiven in exceptional circumstances. They may not try to take advantage of this opportunity, however, because excessive hardship is difficult to show.

Essentially, your attorney will need to assist you in documenting your income and spending and demonstrating that the loan load is preventing you from maintaining a minimum standard of life. If your financial difficulty is caused by a physical condition or handicap that prevents you from working for a lengthy period of time, you have a stronger chance of successfully filing for bankruptcy based on undue hardship.

For example, owing to their leukemia diagnosis and worsening physical condition, the debtor in one case from 2012 research on bankruptcies involving federal student loans was allowed to discharge almost $130,000 in student debts.

Owning to an educational institution that isn’t eligible

You may be able to get your debt forgiven if you took out a private student loan but did not attend an accredited educational institution. A school must be accredited under Title IV of the Higher Education Act to be recognized an eligible institution. You may look up the name of your school on the Department of Education’s list of qualifying schools.

Some shorter unaccredited training programs, such as aviation schools, culinary schools, and leadership training or coaching schools, may not appear on the list. You can get your debt forgiven if your school isn’t on the list.

Unqualifying expenses

Tuition, books, supplies, and essential equipment are all examples of approved higher education expenditures that can be paid using private student loans. Only if you are enrolled at least half-time is room and board an eligible cost. If you received funding for unqualified expenditures like school-sponsored travel or discretionary charges like intramural sports or sorority/fraternity fees while enrolled less than half-time, you may be eligible to get part of your debt dismissed.

Consult a bankruptcy lawyer for assistance

If you believe you may be eligible for any of the aforementioned unique situations, contact a bankruptcy attorney as soon as possible! You can reach out to The Law Offices of Paul Y. Lee at 951-755-1000 for immediate help.