Contrary to popular belief, it is not impossible to have your student loan debt discharged in bankruptcy. Findings from a study conducted by Jason Iuliano, a Harvard Law graduate and a Ph.D. candidate at Princeton reveal that 40% of those who filed received some sort of discharge from the bankruptcy court.
Iuliano reviewed every bankruptcy case involving student loan debt from 2007. Of the 169,774 student loan debtors who filed for bankruptcy, only 213 filed adversary proceedings. An adversary proceeding is a lawsuit filed within a bankruptcy case. It is also a necessary step in bankruptcy when you are seeking to have student loan debt discharged. Out of the 213 who filed an adversary proceeding, 51 debtors received a full discharge, 30 received a partial discharge and 25 received an administrative remedy.
This means that only 0.1% of those who filed for bankruptcy tried to have their student loan debts discharged and of those who tried, half of them received some form of relief from the court.
Due to the public’s perception that student loan debt cannot be discharged, most student loan debtors who are struggling with large amounts of debt do not attempt to have their loans forgiven.
Below are the steps you should take if you are considering filing for bankruptcy to have your student loan debts discharged:
Hire an attorney. Do not be discouraged if you have to meet with several attorneys before finding one who is willing to take on your case. There are some bankruptcy attorneys who do not take on cases involving student loan debt.
Do some background research for yourself. Look into some of the successful cases where the debtors experienced similar financial struggles that you are experiencing.
Try to negotiate with your lender before filing for bankruptcy. The Department of Education has issued a guidance stating when a lender should not contest a debtor’s claim of undue hardship in bankruptcy.
Bankruptcy court can be invasive. If you decide to file bankruptcy, expect that all of your finances and purchases will be questioned.
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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, 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 www.miamibankruptcy.com.
Related Sources:
http://www.alllaw.com/articles/nolo/bankruptcy/adversary-proceedings-bankruptcy.html
