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Your Student Loan Debt CAN be Discharged Through Bankruptcy

There has been long a perpetuating myth that student loan debt in America cannot be wiped out by declaring bankruptcy. The truth is quite the opposite. A court can grant you a discharge provided you can prove it is causing you ‘undue hardship’. Courts will use different tests to evaluate whether it might be causing you undue hardship. The commonly used is the Brunner test. Passing it requires you to prove that: 1. You and your dependents are unable to maintain the ‘minimal’ standard of living because of the debt 2. Additional circumstances exist that will make such a state of affairs to persist for a long period 3. You had made real effort to repay your student loan debt. On the surface, this does make it seem that qualifying for a discharge might be difficult, but an empirical student from Villanova University found that judges have granted a hardship discharge to 40% of debtors who sought one. In such a context, it may be surprising to find that 99.9% of debtors who have filed for bankruptcy don’t even attempt to discharge their student loans. With more and more individuals suffering from mounting student loan debt, it remains highly critical to raise awareness about how it could potentially be wiped out. Link to the study: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1894445 #bankruptcy #chapter13 #chapter7 #studentloans