Overview Of Student Loans And Bankruptcy

According to information gathered by a Detroit bankruptcy lawyer's office, seniors who graduated with four-year undergraduate degrees in 2007-2008, carried with them student loan debt averaging $23,186. Today, few students can afford to pay for college without some type of financial aid. After graduation, life moves on in the form of jobs, cars, mortgages, child care expenses another bills related to "real life". And, unfortunately, student loan debt gets pushed to the bottom of the list for payment. Just as the cost of college has risen, so has the rate of default on these loans. As a result, the federal government - who provides most of the funds for student loans - has put tighter restrictions on delaying or cancelling student debts meaning that most student loan debt is no long dischargeable under either Chapter 13 or Chapter 7 bankruptcy.

As with anything, there are exceptions and your Detroit bankruptcy lawyer can explain these, depending on individual situations. The trustee assigned to your case will review your situation in light of the government's guidelines to determine if exempting these loans from bankruptcy will place "undue hardship" on you or your dependents. The trustee will subject your information to three tests:

1. Will exempting these debts from discharge create an "undue hardship" on the debtor's income? In other words, will exempting these debts from discharge cause the debtor to be unable to provide food and shelter for his or her family to a minimum standard?

2. Is it reasonable to assume that the income of the debtor is likely to remain at a level that makes statement 1 true for the majority of the repayment period of the loan? In other words, is the debtor's income likely to soar in say, a year or so, making future repayment of the loan more than possible?

3. Has the debtor made a good faith effort in the past to repay these loans? Did the debtor at least try to pay off his or her student loans in a timely manner in the past? Is the inability to pay a recent event?

When your bankruptcy petition is filed by a Detroit bankruptcy lawyer, you must, at that time, provide proof that you cannot make the student loan payments and that you do not expect to be able to in the future. You must apply for a "hardship discharge" for these debts before your other debts have been discharged. Guidelines for the discharge of education debt are not part of the Bankruptcy Code and the decisions on these are left up to the bankruptcy courts in the individual states. Fees for filing for this hardship discharge are not usually included in the standard fees for filing bankruptcy and must be paid separately.

For experienced, knowledgeable and trustworthy bankruptcy assistance, contact the attorneys from www.legalhelpers.com. Call toll-free 800-260-1402 today for your initial free consultation or come into one of their 100 offices across the country.