Discharging Student Loans in the New Year
In the days, weeks, and months of every new year, debtors file for bankruptcy in order to get a fresh start financially. With changes to the process for having student loans discharged now firmly in place, debtors can file for personal bankruptcy and can go through a much simpler and less costly process to have their student loans discharged through bankruptcy. Are you currently struggling with student loans and other debt, and considering the possibility of filing for bankruptcy? You may be able to have your student loans discharged when you file for bankruptcy now or in the new year. Our West Palm Beach bankruptcy attorneys can tell you more.
Adversary Proceeding Will Be Easier
One of the reasons that many debtors avoided seeking a discharge of student loans in the past was that the adversary proceeding — a separate proceeding that is filed parallel to the bankruptcy case — was extremely complex, and often resulted in a significant amount of time, energy, and financial costs to the debtor. With a new process in place for seeking a discharge of student loans through bankruptcy, it is important to know that you will still need to file an adversary proceeding, but the process that occurs during the adversary proceeding has been simplified immensely.
To be clear, as the US Department of Justice (DOJ) explains, “Congress has set a higher bar for discharging student loan debt compared to other debt,” which means that a debtor must go through an adversary proceeding in order to prove that “paying their student loans would impose an undue hardship.” However, as the DOJ underscores, that adversary proceeding “need not be an insurmountable barrier for debtors who cannot afford to pay their student loans.” Accordingly, the adversary proceeding is not simplified.
What Will I Need to Do?
What is involved in the simplification and amendment to the process of proving undue hardship in an adversary proceeding? Under the new and current process, the proof will come from the information you supply (with help from your lawyer) in a standard, 15-page document known as the “attestation form.” In the attestation form, you will supply information that will provide proof to the DOJ that continuing to pay your student loans would impose an undue hardship on you.
When DOJ attorneys review the information you have supplied, they will be looking for proof of the following three factors:
- Your current financial situation impacts your present ability to pay your student loans;
- Your financial situation is likely to persist into the future such that your future ability to pay is also limited; and
- You have made good faith efforts to remain in good standing with your student loans (by seeking forbearances, for example, or requesting an income-driven plan).
Contact a West Palm Beach Bankruptcy Attorney Today
Debtors throughout South Florida struggle with student loan debt, and having those loans discharged in a consumer bankruptcy case can be life-changing for those borrowers. If you have questions about discharging student loans in bankruptcy or want to find out about your eligibility, you should contact one of the experienced West Palm Beach bankruptcy lawyers at Kelley, Fulton, Kaplan & Eller to discuss your situation. We can assess your financial circumstances and can tell you more about the likelihood of having your loans discharged in a bankruptcy case. If you are likely eligible to have your student loans discharged, we can begin working with you today to get started on a bankruptcy filing.