Contrary to the 2005 ruling that prohibits student loan debt from being discharged through bankruptcy, there lies an exception to the rule. If ‘undue hardship’ can be proven, bankruptcy courts can discharge full or partial student loan debt. In 1987 the Brunner test was introduced to help establish the term ‘undue hardship.’ The test includes the following three conditions:
• The debtor cannot maintain a minimal standard of living if forced to repay the loans.
• The debtor must have additional circumstances that indicate this hardship is likely to continue throughout a significant portion of the repayment period.
• The debtor must have made good faith efforts to repay the loans.
The National Association of Consumer Bankruptcy Attorneys conducted a survey last year showing that 94 percent of attorneys reported that few to none of their clients would meet the undue hardship eligibility requirements. However, consumers that do meet the requirements have surprisingly high success rates of being discharged of their debt by the court system.
Many Americans carry student loan debt for the rest of their lives and sometimes it can later affect a consumer’s social security payments. In the last year student loan debt in the U.S. surpassed the $1 trillion mark and averaged around $17,000 in debt per person. In most cases where consumers have successfully proven undue hardship, there has been some type of health related condition hindering the person’s ability to obtain or keep a job.
To read more on this story visit: http://blogs.lawyers.com/2012/09/escape-student-loans-in-bankruptcy-in-extreme-circumstances/
If you are in a financial crisis and are considering filing bankruptcy, contact an experienced attorney who can advise you of all of 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, P.A. 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, P.A. at www.miamibankruptcy.com.
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