West Palm Beach Bankruptcy Lawyer

Bankruptcy and Student Loans

Students have had to take out increasingly large amounts of money in loans to pay for their college educations. Those who attend graduate school frequently have more debt than those who have undergraduate loans alone. Because of this, students frequently experience difficulty paying back their debts.

Unfortunately, bankruptcy is not the easiest way out of student debt. In fact, bankruptcy should be considered as an absolute last resort. It is a last resort because even after all bankruptcy efforts, student loans are not normally included in a bankruptcy filing.

In order to have a student loan included in a bankruptcy filing, it is imperative that a student be able to show that an education loan payment is an “undue hardship” on the former student, the family, and the dependents. Unless this can be shown, student loans are ineligible for cancellation, or discharge, in bankruptcy.

It is difficult to prove “undue hardship” unless an individual is physically unable to work and there is no way for the former student to make money. If this is provable, student loans have to be discharged via a separate motion with the bankruptcy court and then present the situation to the judge.

There were a number of laws passed in the 1990s to protect taxpayers from the number of student loans in default or included in bankruptcy. Even with the number of student loan bankruptcies reduced significantly, it is still estimated that the average U.S. family pays about $400 per year in taxes toward bankruptcy court costs, regulations, and staff.

Contact a West Palm Beach Bankruptcy Lawyer

If you are facing exorbitant student loan payments and are unable to work and are considering filing for bankruptcy, contact the West Palm Beach bankruptcy lawyer of Eric N. Klein & Associates at 561-353-2800 to determine the best form of bankruptcy for you.