Chapter 7 bankruptcy provides a crucial lifeline for borrowers struggling with unsecured debt, allowing you to complete discharge credit cards, personal loans, and even some back taxes. As the average student loan debt Americans carry continues to spiral upward, an increasing number of borrowers may be considering liquidating their assets and starting over. However, federal bankruptcy law exempts student loans, making them very difficult to discharge through liquidation.

Chapter 7 Bankruptcy & Student Loan Debt

When Can Student Loans Be Forgiven?

While student loans are excluded from discharge in a typical chapter 7 bankruptcy, you may be able to have the debt forgiven by showing that paying them back would impose an undue hardship. When determining whether you qualify, the court will examine a variety of factors including your income, your financial opportunities, and other circumstances of your life.

Demonstrating Undue Hardship

To prove that paying back student loans would create an undue hardship, you must demonstrate that the payments would make it impossible to maintain a normal standard of living. You will also have to explain why you lack sufficient income to pay back your debt and show that those circumstances are likely to continue.

Applying for Elimination of Student Loans

After filing for bankruptcy, you’ll need to file a separate petition called an “adversary proceeding.” Because this process is often much more complex and adversarial than a traditional bankruptcy, you should always speak with an attorney before filing. With their extensive expertise and knowledge of the law, your lawyer will represent your interests and substantially increase your chances of success.

As a full-service law firm, John D. Wieser Esq., PC has helped countless borrowers throughout Rochester, NY reclaim their lives from debt. This team of professionals will identify all of your options, prepare the paperwork, and guide you toward financial solvency. Visit their website for more on their chapter 7 bankruptcy services, follow their Facebook for tips and news, or call (585) 328-0660 for a consultation today.