More Student Loan Borrowers are Using Bankruptcy to Ease Their Burden

by San Antonio Attorney

People who are struggling with student loan debts often find it hard to ease their burden.   Consequently, more college graduates are delaying things like purchasing a home or getting married, so that they can pay off their huge student loans.   A lot of college graduates return to their parents’ house because the debt is too big for them to afford renting their own place.

But a trending option among those overwhelmed by student debt is providing debt relief — filing bankruptcy.   Starting March 2016, there have been many bankruptcy courts that granted borrowers’ request to cancel their private student debt using unclear wording of how a student loan is defined.   Normally, bankruptcy cannot be used by student borrowers to discharge their private debt, according to a Wall Street Journal report.

The Bankruptcy Law does not allow a borrower to discharge a loan obtained for an educational assistance without showing tremendous financial hardship.   Students have argued that their debts are not covered by this statement because they enrolled to an institution that was not accredited or obtained loans for the purposes of studying for the bar exam or other tests.

Although this is usually not a winning argument, in some cases judges have concurred with the student.

It’s normally very difficult to wipe out your student loans through a standard bankruptcy process.   But an experienced Debt Relief Attorney will tell you that student loans can be discharged in bankruptcy.   Under this proceeding, you need to prove that paying the debt causes “undue hardship.”

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