The Social Security system is in place to help us through difficult times. Unfortunately, there are some instances in which the system makes our lives even more difficult than they need to be. The day I received the denial letter for my claim, I wasn't sure what I was going to do. After talking with a few friends, I contacted a lawyer. That was the best decision I had ever made. Even with the professional assistance, getting the denial overturned and getting the money that I was owed took several months. I have kept a clear journal of my experience and loaded it with information that can help others get through what can be an impossible time.
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Social security denial - a journal of assistance
How To Get Student Loans Discharged Through Bankruptcy
Alexis Garcia
If you're drowning in student loans, you may have heard that you're stuck—there's nothing you can do about it; just suck it up and pay them off. While this isn't what you want to hear, you've probably accepted it as truth. But there's good news. If your financial state has gotten to the point where you're considering bankruptcy, you may be able to get relief from your student loans, and here's how.
Chapter 7 vs. Chapter 13
You have a few options when you file bankruptcy. But if you're going to request to have your student loans forgiven, you'll need to file for Chapter 7 bankruptcy.
In Chapter 13 bankruptcy, debtors will pay off some of their debts over a period of 3-5 years, then have most of the remaining debts discharged. This can definitely help you financially as it may lower the monthly payments you're making towards your student loans. But it will not forgive them.
With a Chapter 7 bankruptcy, you will be allowed to file a petition called an adversary proceeding. This is required in order to get your student loans discharged.
Requesting Relief – Knowledge is Power
Out of the almost 170,000 debtors who had student loan debt and filed bankruptcy in 2007, only 213 filed an adversary proceeding to get their loans discharged. Out of those 213 that filed the petition, 81 were granted some form of relief, whether a full or partial discharge.
This might sound like a small number, but the truth is, most of those filing simply didn't know that they could request relief. In fact, it's been estimated that about 70,000 people who file bankruptcy each year actually qualify to have some or all of their student loans forgiven. It's simply a matter of those 70,000 stepping forward to ask for forgiveness.
Obtaining Relief – Passing the Test
How do you know if you qualify for student loan discharge through bankruptcy?
For the most part, the courts will ask you to prove that paying off the debts would place an undue hardship on you and your family. For example, you may have extremely low income or you might have graduated from a for-profit trade school. Specifically, the courts will see if you meet the following criteria, otherwise known as the Brunner test:
- Minimal standard of living cannot be met if the debtor pays off the loans.
- Additional circumstances surround the debtor's financial situation that make it unlikely that the situation will change any time soon.
- Good faith efforts have been made by the debtor to repay the loan.
Requesting Relief After You've Filed
If you've already filed bankruptcy and have decided to seek relief, it's not too late.
Usually, you can re-open your case and file an adversary proceeding at any time. A licensed attorney can walk you through the steps to increase the odds of getting the loans discharged.
The Future Looks Bright
When looking at the Brunner test, it's easy to see that the courts may decline your petition based on your future ability to pay. And quite often, that's one of the reasons some debtor's loans don't get discharged in their Chapter 7 bankruptcy. But it looks as though the courts may be trending towards a less harsh approach, indicating there's hope for the future.
In a recent case (Conway v. National Collegiate Trust), it was shown that Ms. Conway received her B.A. in Writing. Over time, she suffered several job losses, making her ability to pay back the more than $100,000 in student loans to 20 different institutions extremely difficult, if not impossible. When she filed for bankruptcy, her initial request to have all of the loans forgiven was denied with the court arguing that she had decent writing skills and plenty of time to find a good job. In other words, her circumstances were not permanent and she failed the Brunner test.
Upon the appeal, however, the Bankruptcy Appellate Panel looked at her current wages instead. They ultimately ruled that the $846.17 monthly payment would place an undue hardship on her, effectively discharging a total of $118,579.66 in student loan debts. While no one should expect that there will be a wave of student loan debts discharged, this particular case has clearly set a precedent for others to seek relief without having to meet every criteria of the Brunner test.
No matter what your situation, if you are considering filing bankruptcy and need help getting student loans discharged, you should seek advice from an attorney. According to Jason Iuliano, retaining an attorney with a proven track record of winning these sorts of cases can increase your odds of getting the relief you need. For more information, contact a firm like Wagner Law Office PC.
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