Discard your student loans
Student loans fall into a group of debts that are usually not discharged, unless the debtor or his attorney can persuade the court that they should be. Legally speaking, an individual has to prove that paying of that debt will “impose an undue hardship on you” and the court will determine whether this is true or not.
Usually, the court needs to be convinced in three major things. The first one is that financial state of the debtor, considering current incomes and expenses, is alarming and if he continues repaying the debt any further, maintaining the minimum of living standard will become impossible. Also, the debtor has to prove that it is likely to expect that this troubling situation is about to last for a significant period of time. And the last, but not the least – the court has to be persuaded that the debtor gave all of his efforts and exhausted all the possibilities to repay the debt.
If the court determines that particular case qualifies for discharge, complete amount of the debt will be discarded.
Even if the debtor’s financial situation meets the criteria for discharge of student loans, filing bankruptcy doesn’t discharge it automatically. There is a specific procedure the debtor needs to complete in order to include student loans into discharged debts. The procedure is called an adversary proceeding and it refers to a separate lawsuit filed within the bankruptcy case. Filing this proceeding may be done at the same time when filing bankruptcy. If the debtor has already filed bankruptcy petition without filing for determination of undue hardship, the bankruptcy case can be reopened without paying additional fees. Visit chapter 7 bankruptcy lawyers chicago for help.
There is another option for debtor who failed to prove undue hardship. Filing bankruptcy under the chapter 13, often called “reorganization” or rehabilitating bankruptcy, offers the debtor a possibility to repay his debts over some extended period of time, according to the repayment play. Depending on a particular situation, even the reduction of the debts is possible sometimes. During the repayment period, as long as the debtor pays determined shares in timely manner, creditors are not allowed to pull any collection actions against the debtor.