When a person is in debt and he feels that he doesn’t have the ability to repay them with the meager funds that he has, he usually takes the decision of filing bankruptcy. Most unsecured and some secured debts are discharged through bankruptcy, but unfortunately since the amendment of the US Bankruptcy Code in 1998, most federal student loans were not discharged through bankruptcy, whether Ch 7 or Ch 13. This particular code was amended even further and this barred the private student loans from bankruptcy discharge too. However, you may be relieved to know as a student that the court will discharge student loans only under certain situations. Here are some steps that you may take.
- Hire an attorney and check your situation: As a student, you may not know the details of bankruptcy and hence you should hire a bankruptcy attorney who can examine your situation in order to determine whether or not you qualify for the student loans to be discharged through the court. You should be aware of the fact that the court will only accept discharging your debts when you can prove that you’re going through undue financial hardship. If you’re physically not able to work, or seriously ill or in any other situation that is not letting you earn money, the court will accept your verdict.
- File a petition: When you check with your attorney that you qualify for the discharge, you need to file a petition of too much hardship with the bankruptcy court. This particular petition will also be attached to the bankruptcy petition and will also explain the situation that you’re unable to continue making the student loan payments.
- Meet the judge: Then you should present the case in front of the judge and let your attorney assist you by explaining your present financial situation in front of the court. If you both are successful in preparing the motion, the judge may consider including your student loan in bankruptcy.