With student loan debt at nearly $1.5 trillion, 40 percent of borrowers will default on their student loans by 2023, according to a recent study by Brookings Institute. The staggering numbers have caused the Department of Education to take action and announce that it will review and potentially alter policies that make it exceedingly difficult for student loan debt to be discharged in bankruptcy.
The problem is that ‘undue hardship’ was never defined and the case law has never led to a standardized definition. Courts often use the “Brunner Test,” which requires you must show that you cannot maintain a basic standard of living while paying the student loans and that this difficulty would last throughout the majority of the repayment period. You also must prove that you made a good showing of trying to repay your student loan debt.
The Department of Education’s latest actions indicate that they will broaden the “undue hardship” current definition – which is good news for student loan borrowers. This change could also help streamline the bankruptcy process and help borrowers struggling with massive student loan debt rebuild their lives.
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For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.