People in Western Kentucky with a family and a full-time job may still want to seek educational opportunities to further their career. For some, this may mean going to night school or attending college part-time. While the certifications and degrees earned through these endeavors are meant to lead to financial success, many people have no choice but to finance their education with student loans, which can become overwhelming burdensome. Matters are only made worse in an uncertain economy with few job opportunities or if a major illness or other unexpected expense strikes. When this happens, you may consider filing for bankruptcy.

Understanding what debts can be cancelled through Chapter 7 or Chapter 13 bankruptcy can be complicated. For example, you may have heard that student loans can never be discharged through bankruptcy, meaning you will still be paying them back even after the bankruptcy process is complete. However, this is not the whole story.

Discharging student loans through bankruptcy

It is possible in certain circumstances to have your student loans discharged through bankruptcy. However, you do need to submit a separate filing with the court called an “adversary proceeding.”

In the adversary proceeding, your student loans may be discharged if you can show that paying them back would cause you and your dependents to suffer undue hardship. While there is not any one test courts use to determine what constitutes an undue hardship, the court will examine a variety of factors when making such decisions. These factors include:

  • Whether paying your loan back would mean you could not maintain a minimal standard of living
  • Whether this hardship would last for a significant amount of time over the course of paying back the loan
  • Whether you made a good faith attempt to pay back your student loans before resorting to bankruptcy

Seeking a discharge of student loans can lead to various results. It is possible the entire loan will be discharged, meaning you no longer need to make payments and any collection activities will cease. Other times, a loan may be partially discharged, meaning you would still have to make repayments on some of the loan. Finally, your loans may not be discharged, so you would still have to make payments although the court may set different terms for paying back the loan, such as lowering the interest rate.

Attorneys in Paducah can help you address student loan debt

Ultimately, it is not common for people filing for bankruptcy to seek a discharge of their student loans, but that does not mean a discharge is impossible. Ultimately, this post cannot promise any outcome to your bankruptcy filing, so if you want to seek a discharge of your student loans, you will want to seek the help of a bankruptcy attorney.

Attorneys in Western Kentucky understand that sometimes you need a fresh financial start, and that filing for bankruptcy is one way to achieve this goal. Hard-working people can fall on tough financial times through no fault of their own, especially when trying to pay back their student loans causes them to fall behind on their other financial obligations. Our firm’s webpage on bankruptcy and student loans may be a good starting point for those who want an attorney’s assistance with this endeavor.