Student Loans, Timothy Kingcade Posts

Student Loans and Bankruptcy: What the Department of Education Has to Say

Last week, the Department of Education provided guidance on how it will deal with bankruptcy discharge requests for government backed student loan debt. The Department of Education hopes to provide a balance when collecting on student loans, taking possible undue hardship on the debtor into consideration.

The July 7th document has broken down the updated Undue Hardship Formula, which will be used to help the Department of Education find a suitable balance between collecting debts versus allowing debt to be discharged.

The following factors will be considered regarding undue hardship when it comes to the discharge of student loan debt:

• If a debtor has filed for bankruptcy;

• If a debtor asserts undue hardship due to physical or mental impairment;

• If a debtor is a veteran who is unemployable, as determined by the Department of Veterans Affairs;

• If a debtor is approaching retirement, taking into consideration the debtor’s age at the time student loans were borrowed;

• If a debtor’s health has significantly changed since the student loan debt was incurred;

• If significant time has elapsed since the debt was incurred;

• If a debtor’s expenses are reasonable, without unnecessary expenses to provide funds for student loan repayment;

• If a debtor had the mental and/or physical capacity to pursue discharge or aid;

While the Department of Education has provided guidance to clarify the process, developments are still underway.  If a debtor cannot discharge student loan debt as an undue hardship, there is still the opportunity to “agree to discharge of a portion of the amount owed.”

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