Discharging Students Loans with Bankruptcy
Student loan holders now have a new way to discharge debt through bankruptcy! Read on to find out if this applies to you if you’ve been stressing over how to pay off your debts!
On November 17, 2022, President Biden announced a fundamental change in how student loans will be handled. The goal is to increase the fairness and consistency of the procedure. The Department of Justice’s attorneys will now evaluate each case in light of criteria to determine whether a complete or partial discharge is possible. The bankruptcy court will still have the last word.
Columbus Bankruptcy Attorneys on the Huge Bankruptcy Changes
Student loan discharge has always been a challenging bankruptcy obstacle. The Department of Justice vehemently opposed any legal actions that sought to discharge these kinds of obligations. We are drawn to the idea of being able to assist individuals in escaping their crippling student loan debt, thanks to this recent statement. We shall respond to the following essential topics in this article:
- Discharging Student Loans in Bankruptcy: Key Things You Need to Know
- Debt Discharge Procedure
- Criteria for Consideration for Student Debt Elimination
Discharging Student Loans in Bankruptcy: Key Things You Need to Know
There are only five things you must remember:
- This advice covers only federal student loans.
- With your request, you must submit a borrower-attestation form.
- Before proposing that your obligations be discharged, the Justice Department attorneys will consider certain factors.
- To erase your debt, you must still declare bankruptcy.
- You must bring a lawsuit in bankruptcy against the Education Department.
Debt Discharge Procedure
In conclusion, the following occurs once you turn in the necessary documentation:
- The Justice Department examines the material provided with assistance from the Department of Education.
- They will consider the elements pertinent to your inquiry about unjustified hardship.
- Based on that evaluation, they will decide whether to advise the bankruptcy judge to discharge your obligations.
Note that Justice Department lawyers will make only suggestions. In the end, the bankruptcy court makes the decision about the dischargeability of your debts. Nevertheless, this rule makes the method for analyzing student debt clearer and more equitable.
Criteria for Consideration for Student Debt Elimination
The Justice Department offered a new method for cases involving the discharge of student loan debt. The following factors will be taken into account by the departments of education and justice before recommending discharge:
The Capability of Repaying Student Loans
The Justice Department attorney will compute your expenses and compare them to your income using current criteria created by the IRS and the data you give. If your expenses are equivalent to or greater than your income, the Department will conclude that the debtor cannot pay.
The Department will put an emphasis on objective standards that show your reasonable attempts to manage to spend, earn income, and repay the loan when establishing what courts refer to as the “good faith” criterion. The Department attorney will consider whether the borrower contacted the Department of Education or their loan servicer to inquire about loan payment choices.
The Capability of Repaying Future Debts
The Department will then determine whether your debtor status will remain unchanged going forward. If specific circumstances exist, the Department attorney will assume that your financial situation is unlikely to change. Some of these factors include retirement age, disability or chronic injury, unemployment history, lack of education, and extended repayment status.
Live with Fewer Worries – Seek the Legal Assistance of a Bankruptcy Attorney to Wipe-Off Your Student Loan Debts Now!
If you are deeply in debt due to student loans, you may be reluctant to employ an attorney. After all, it’s an added expense to your already massive financial obligations. However, the costs of someone not hiring an attorney may outweigh the savings from avoiding attorney fees. If your petition is denied, you will still be responsible for your student loan debt. Do not allow this to happen to you.
If you live in Columbus, Sheppard Law Offices have experienced bankruptcy attorneys who can help you get a fresh start and relief from financial burdens.
If you’re ready to take the first step toward a secure financial future, contact our Columbus law firm today!