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Law offices of Stephen Barszcz Disability Lawyer
  • NATIONAL DISABILITY ATTORNEY

Your Student Loans Could Be Discharged in Bankruptcy

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Did you know that you could be eligible to have your student loans discharged if you file for personal bankruptcy? Until relatively recently, the process for having student loans discharged in consumer bankruptcy cases was extremely complicated, and many debtors did not even attempt to seek a discharge. However, in late 2022, the US Department of Justice (DOJ) announced guidance involving a new process for seeking a discharge of student loans, and that process has since been implemented. According to a recent report from CNN, that new process is working. Indeed, according to the report, about 98 percent of debtors who have sought a discharge of their student loans since the implementation of the guidance have received a full or partial discharge of educational debt.

What else should you know? Our St. Petersburg bankruptcy lawyers can tell you more, and we can begin working with you today on a bankruptcy case involving student debt.

New Guidance is Making Student Loan Debt Easier to Discharge 

If you are struggling with student loan debt and considering bankruptcy, the key takeaway from the CNN report is that the new guidance from the DOJ is making it easier for people with student loan debt to have that debt fully or partially discharged in a bankruptcy case. You might be wondering: how is the new guidance making student loan debt discharge easier?

In short, the overarching requirement to have student debt discharged has not changed (and we will explain that momentarily), but the process for showing that you meet the requirement has become significantly easier. Under the US Bankruptcy Code, a debtor must prove that continuing to pay student loans would impose an “undue hardship” on them in order to have their educational debt discharged. The process for proving an “undue hardship” used to be extremely complicated, time-consuming, and expensive. What the guidance did was make that process much easier and more streamlined. Now, with the new guidance, a debtor only must complete an “attestation form” that contains all of the required information.

How the Attestation Form Works 

When you file for bankruptcy and want to have student loans discharged, you will still need to file a parallel “adversary proceeding,” but in this proceeding, as we noted above, you will simply work with your attorney to complete the required 15-page attestation form. That form will ask for information about your current financial circumstances, likely future financial circumstances, and past efforts to manage your student loans.

Then, looking at the information related to those three factors, a DOJ attorney will review your form and make a recommendation to the bankruptcy judge concerning discharge.

Contact a Bankruptcy Lawyer in St. Petersburg 

Do you have a significant amount of student loan debt, and would you like to find out if you could have that debt discharged in a bankruptcy case? You should get in touch with an experienced St. Petersburg bankruptcy attorney at the Law Offices of Stephen Barszcz to discuss the facts of your case and to provide more details about your financial history and present circumstances. We can assess your case and help you to understand whether a discharge could be possible. If so, we can begin working with you today on your bankruptcy filing. Contact us for more information.

Sources:

cnn.com/2024/07/17/politics/student-loan-debt-bankruptcy/index.html

justice.gov/d9/pages/attachments/2022/11/17/student_loan_discharge_guidance_-_fact_sheet_0.pdf

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