There are certain debts that cannot be discharged in a bankruptcy filing. Many Americans have a common denominator of a large amount of student loans from their college years. Over the years college graduates have looked for a way to eliminate their student loans through a bankruptcy filing. There are many stories on the Internet of how someone filing for bankruptcy included their student loans and got them discharged. Most of these are just stories and not the truth. If you consult a bankruptcy attorney the standard answer given will be that student loans cannot be discharged in a Chapter 7 bankruptcy. In most situations, this is the rule of thumb.
However, there are exceptions to everything. Having a student loan wiped out in bankruptcy is not easy, but can be done in some cases with the help of a bankruptcy attorney to do it. If the debtor tries to represent themselves, usually, it won’t end well.
In general terms, the bankruptcy attorney, representing the debtor, files a complaint with the bankruptcy court to ask the judge to rule that the student loans are dischargeable. Depending on the circumstances, if the judge won’t discharge them, many times they will reduce the balance that is due on the contract.
When a debtor files for Chapter 7 bankruptcy, there is a presumption that the debtor will make better decisions in the future to improve their overall life. There is a hope that the debtor will not make the same mistakes and become burdened by debt again. These are presumptions that are important to a bankruptcy judge when considering whether or not to discharge the student loans. It’s up to the debtor’s bankruptcy attorney to show evidence of why and how it will help the debtor move forward in life.
There are a few things that will help the debtor’s case to eliminate the student loans in bankruptcy. The most common is showing that the debtor won’t have the ability to ever pay the loans back after the bankruptcy filing. This could be due to a medical reason or the age of the debtor. These conditions help a bankruptcy attorney to easily prove the debtor’s case.