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How to Get Help with Your Student Loan Debt

Are Student Loans Discharged in Bankruptcy?

Student loans account for the second highest consumer debt category in the United States. On average, federal student loan debt for a college graduate is more than $36,000 per borrower. For private loans, the average is over $54,000.

Only in limited circumstances can student debt be discharged through Chapter 7 or Chapter 13 bankruptcy. An individual must show that undue financial hardship prevents repayment of their loan. The evidence of undue hardship is submitted to the bankruptcy court in a special filing called an Adversary Proceeding.

A college graduation cap with tassle, sitting on top of a rolled up stack of money and coins.

Michelle Labayen can effectively handle the explanation of undue financial hardship and the process for discharging your student debt through bankruptcy.

What Are the Requirements for Discharging Student Loans?

The eligibility requirements for student loan forgiveness only apply under very specific conditions. The standards for undue hardship are restrictive in bankruptcy court, and you need concrete and extensive evidence proving that you're suffering extenuating financial circumstances.

If your student loan payments prevent you from maintaining a normal standard of living, you may qualify as having an undue financial hardship. According to federal bankruptcy laws, undue financial hardship exists under certian circumstances:

  • The borrower of the student loan has endured extenuating financial circumstances
  • These extenuating circumstances are expected to continue for the duration of repayment of a student loan
  • The borrower made a good faith effort before filing for bankruptcy to repay the student loan in accordance with the monthly repayment schedule.

If you're not sure if you qualify for undue finanical hardship, contact The Offices of Michelle Labayen to schedule a free consultation. Michelle will cover the eligibility requirements of undue financial hardship and help determine whether you qualify.

When Is Student Loan Forgiveness the Best Choice?

It can years to repay your college student loans. This can significantly effect your financial future. Monthly payments can make it difficult or even impossible to maintain a normal standard of living.

New York bankruptcy courts are incentivized to prevent these extreme financial circumstances. As a result, the process for student loan forgiveness through bankruptcy made easier.

However, the only time you should initiate a bankruptcy proceeding or request forgiveness of student loans is when making payments creates a financial hardship.

How Do You Ask the Court to Discharge Your Student Loans?

Before filing for Chapter 7 bankruptcy or reorganization under Chapter 13 bankruptcy in NYC, you should organize all evidence of undue financial hardship. This includes:

    Attempts to make the monthly installments on your student loan

    Partial payment of a student loan installment

    Requests to the lender for a workable payment plan

    Attempts to contact the lender for extensions or delaying repayment

If you have a record of a good faith attempt to repay the loan and evidence of an ongoing and long-term financial difficulty, then you can file this evidence in the bankruptcy court through an Adversary Proceeding.

An Adversary Proceeding is a special filing in bankruptcy court that can be confusing without professional legal help.

A student leaning their head on the table behind a pile of textbooks.

How can a Bankruptcy Attorney Help to Reduce the Burden of Student Loans?

Michelle Labayen has successfully submitted Adversary Proceedings for multiple clients and represented individuals seeking student loan forgiveness through bankruptcy. Based on her extensive prior experience, she will walk you through the specific steps for filing an Adversary Proceeding and having it approved by the court.

If you're struggling to pay your bills because of student loans and financial hardship, contact The Law Offices of Michelle Labayen today and get on the road to financial freedom.