Are you having a hard time paying your bills? Is a big part of your problem your student loan debt?

If so, you’re not alone. According to Investopedia.com, 54% of all college attendees assume student debt at an average of over $35,000, and almost 15% carry that debt into adulthood. Even more troubling is the fact that over 10% of student debt is currently at least 90 days past due. If you are one of those who sees no way to paying this debt off, you may be considering bankruptcy. You may also have heard that student debt will not be discharged in bankruptcy. Here’s what you need to know.

Though student debt is traditionally and generally considered a debt that is not dischargeable, there are situations where you can include it in your list of debts and have the court agree that it should be included, but this is the exception rather than the rule. In order for a bankruptcy trustee to include your student loan debt alongside your personal loans, credit card debt, medical bills, and other debt that is making your economic life a challenge, there are certain things that you will need to prove.

The way that discharging debts in bankruptcy works, some debt is what is known as a priority debt that cannot be discharged. Child support is an excellent example of a non-dischargeable debt, where credit card debt is considered a nonpriority, dischargeable debt. Student loans are non-priority, but generally cannot be discharged unless you as the debtor can prove that they are putting you and your dependents through undue hardship. The standard for this varies from court to court but is generally based on several different hardship tests. These tests gauge whether your student debt is leading to your inability to maintain a minimum standard of living for yourself or your family based on your income and expenses; whether the challenges of your economic situation are expected to be persistent; and whether you’ve made a good-faith effort to pay your loan as per the schedule that you committed to. The bankruptcy court will consider these three questions and others and may be willing to discharge your debt if they believe that you are facing undue hardship.

If you need assistance with your own debt situation and paying your student loan debt, then bankruptcy may be the right answer for you. For assistance in assessing your situation, contact us today.

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