student loans

What you need to know

Key takeaways

  • To get student loans discharged, you’ll need to prove that they cause you “undue hardship.”

  • Borrowers can choose between Chapter 7 and Chapter 13 bankruptcy, but they must file a separate adversary proceeding for student loans.

  • The new processes established by the Department of Justice in 2022 has made it easier for borrowers to discharge student loans through bankruptcy.

Filing for student loan bankruptcy is never ideal, but sometimes, having debt discharged is the only way forward. This is especially true if you’ve been struggling financially and cannot repay your debts while still maintaining a minimal standard of living.

Many people believe it’s impossible to get student loans discharged in bankruptcy. That’s not the case — though you have to prove paying down the loans is causing you “undue hardship,” historically a complicated process.

The U.S. Department of Justice and Department of Education recently announced that the new guidelines for discharging student loans in bankruptcy have led to an increase in borrowers applying for and qualifying for debt relief.

How to file for student loan bankruptcy

Declaring bankruptcy on student loans is not easy. And it will affect more than just your college debt. Here are

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January 11, 2024 by ATTORNEY

Student Loan Discharges Approved In 99% Of Cases Under New Policy

The Biden administration this week released highly-anticipated data on a new initiative that makes it easier for borrowers experiencing hardships to discharge their student loans in bankruptcy.

The Education Department and the Department of Justice rolled out experimental guidance last fall to encourage cooperation between the government and student loan borrowers seeking bankruptcy relief. After a year, the program is showing clear signs of success.

“One year ago, we set out to simplify and improve the process for student loan borrowers in bankruptcy,” said Associate Attorney General Vanita Gupta in a statement on Thursday. “I am thrilled that our one-year review indicates that our efforts have made a real difference in borrowers’ lives by ensuring student-loan discharges are more accessible to eligible borrowers. We will continue working with our partners at the

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November 28, 2023 by ATTORNEY

Bankruptcy Expert Claims It May Be Your Only Option if Biden’s $20K Student Loan Forgiveness Plan Fails
Shutterstock / Shutterstock

Shutterstock / Shutterstock

President Joe Biden’s plan to forgive up to $20,000 in federal student loan debt per borrower could soon reach endgame if the U.S. Supreme Court rules against the plan this month, as many predict. If the plan is struck down, at least one legal expert says bankruptcy might be the only option for many borrowers.

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The reason is simple: Many borrowers won’t have enough funds when federal student loan payments resume sometime this summer following a pause of more than three years.

About 20% of student loan borrowers have already defaulted on a loan, according to Jonathan Petts, CEO of Upsolve, a non-profit organization that helps individuals file bankruptcy without using a private attorney. The total amount already in default is more than $124 billion.

“This demonstrates a clear need for a plan to help borrowers facing challenges with paying off their debts,” Petts told GOBankingRates in an email.

He said the Biden forgiveness plan is “likely to be struck down” by the SCOTUS, which means both loan payments and interest will resume not too long

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June 26, 2023 by ATTORNEY

I have $30K in credit card debt. I earn $70K a year. Should I file for bankruptcy?

STATEN ISLAND, N.Y. — Many people will find themselves in debt at some point in their lives.

And it doesn’t matter whether you lost your job or it’s medical bills that have piled up, when you don’t have the money to pay your debt, collectors will track you down. But when deciding whether to file for bankruptcy, there are a lot of factors to consider.

For this reason, we sought advice from Karra L. Kingston, a bankruptcy lawyer on Staten Island and in New Jersey, who has helped hundreds of people get out of debt.

Question: I have 30K in credit card debt. I earn 70K a year. Should I file for bankruptcy?

Kingston: “Filing for bankruptcy is a difficult decision to make, but it can be the most effective way to take control of your finances and make a fresh start. Bankruptcy laws were established to help people who are struggling with debt to find a way out of their financial difficulties.

When deciding whether to file for bankruptcy, you need to assess your financial situation, including whether you have enough money to repay your debts, and whether your monthly expenses are greater than your income. If you

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May 23, 2023 by ATTORNEY

Biden Administration Makes It Easier To Have Debt Discharged Through Bankruptcy
AL DRAGO / POOL / EPA-EFE

AL DRAGO / POOL / EPA-EFE

While certain student loan borrowers can use the bankruptcy process to have their loans discharged, the process has been very cumbersome — but this might change thanks to new guidelines.

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In January, the Justice Department updated the attestation form that borrowers must complete to seek bankruptcy discharge of their federal student loans, Forbes reported. These changes include “tweaks to the reporting of monthly household income, clarifying instructions regarding when a borrower needs to provide additional information, new questions seeking details on whether a school closure impacted a borrower’s ability to repay their student loans, and more detailed information on a borrower’s student loan repayment, deferment, forbearance, and consolidation history.”

In addition, the updates stated that if the borrower is disabled, the disability does not have to be “permanent,” only “chronic” to potentially be a basis for a bankruptcy discharge.

This comes on the heels of the Department of Justice (DOJ), in conjunction with the Department of Education, issuing new guidance to simplify the process and establish standards for borrowers who seek

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March 23, 2023 by ATTORNEY
April 2024
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