Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Bankruptcy’s “Undue Hardship” Requirement Increasingly Difficult for Students to Meet

For many consumers, student loan debt has become a major financial burden. When it becomes too difficult to afford basic living expenses, some turn to bankruptcy as an option. However, if you do not meet the undue hardship requirements, your student loan debt cannot be discharged.

This is exactly what happened to a 45-year-old Maryland woman who was struggling with growing student loan debt. Despite being unemployed, disabled and living far below the poverty line, the court did not allow her to discharge over $37,000 in student loan debt. The reason behind why the judge declined the request was because she had not made any good-faith attempts to repay her loans.

If you have student loan debt that you would like discharged in bankruptcy, an “undue hardship” test is required by the bankruptcy code. This is where you must be able to prove that repaying your student loans would cause “undue hardship” on your life. Unlike credit card debt, the only way to remove student loan debt when filing for bankruptcy is through the undue hardship test. Since the test is not regulated by any law, the courts must determine the severity of the debtor’s circumstances to qualify them for relief.

A three-pronged test can be used to decide whether paying back a student loan would be too difficult for you. The following three items must be proven in order to qualify:

• You must prove that you are unable to maintain a minimal standard of living, while repaying the debt;
• You must prove that your current destitute circumstances will last for a long time;
• You must show that you have made “good-faith efforts” to repay your loan in the past.

Should you fail to adequately prove these three items, you could be denied the option of discharging your student loan debt in bankruptcy. If this occurs, you may also seek help from a federal loan-consolidation program. While a consolidation program would not completely discharge your student loan debt, it could offer a repayment plan that might be more manageable for you.

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 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 website at