Student Loan Bankruptcy
Student loan bankruptcy is a common cause of filing for bankruptcy in Sacramento. But it is not easy. Student loan debt is guaranteed by the government. As such, student loans are not normally discharged, or eliminated, in bankruptcy. To discharge student loan debt in a bankruptcy you must file a lawsuit within the bankruptcy court while your bankruptcy case is pending.
A student loan bankruptcy lawsuit, or adversary proceeding, is an expensive and tough proposition. To prevail, you must establish an undue hardship. The hardship you must prove is more than financial. A showing of inability to earn income, not simply insufficient income, is required. Typically this involves some sort of handicap or indefinite disability preventing you from paying your student loan.
If you face such a hardship, a student loan bankruptcy lawsuit is worthwhile. Student loans are expensive, really expensive. And they are getting worse. But, again, it is a tough task. A recent Forbes article points out the potential problems seeking a discharge, or elimination, of student loan debt.
Often when a student loan bankruptcy lawsuit is not feasible, filing bankruptcy to eliminate other debts is necessary. Paying student loan debts now rivals mortgages as consumers’ largest repayment obstacles. When you have student loan debt you can’t discharge, other debt payments have to be sacrificed. Credit card debt, car payments, medical bills and even mortgage payments can be missed when student loan payments bust your budget.
These other debts, most commonly credit card debt and personal loans, can be discharged in bankruptcy. By eliminating such debts can free your budget to afford your student loans. So even if a student loan debt bankruptcy is not possible, bankruptcy can alleviate your budget to afford your student loan payments. If you are facing student loan repayment problems, bankruptcy may be you best bet. Contact me for a free consultation to evaluate your options.