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Miami Bankruptcy & Criminal Attorney / Blog / Bankruptcy / Discharging Student Loans in Bankruptcy Just Got Easier

Discharging Student Loans in Bankruptcy Just Got Easier


If the possibility of bankruptcy is in your future but you’re concerned because you’ve heard that your student loans are exempt from the process, there may be some good news for you.  That’s because the federal government has made it easier for Americans who are burdened with crippling student debt to get out from under it through bankruptcy.

What’s the New Policy? 

The Department of Education has worked hand in hand with the Department of Justice to address the issue of student loans and bankruptcy. The new policy is focused on fairness and consistency in determining when the discharge of federal student loans makes sense. With the new rules, attorneys from the Justice Department have provided clearer standards for when federal loans should be discharged, eliminating previous investigations that ate up time and energy. Clarified criteria assists borrowers in knowing whether or not they qualify.

Under the old rules, borrowers were forced to prove that there were undue hardships and/or a certainty of hopelessness in order to include student loans in their bankruptcy filings. That’s because policymakers were worried about students racking up thousands in student loan debt and trying to finagle out of paying it back later, so tougher rules were made in regard to student loan debt. Now, borrowers who have made real efforts to repay their student loans but who demonstrate financial need can include that debt in their bankruptcy filings in many instances. Borrowers who are 65+ years old and those who have been making payments for 10+ years, as well as those who did not earn a degree are likely to be considered, along with borrowers whose earning potential has been impacted by a chronic injury or disability.  Certainly, additional circumstances that indicate student loans are an undue hardship may be considered, as well. Borrowers are directed to fill out a 15-page form that gives them the opportunity to make a case for discharge.

Most Borrowers Find New Procedures Work 

Nearly all borrowers who’ve included their student loan debt in bankruptcy filings—99 percent, in fact—have received a full or partial discharge of student loan debt under the new policy. That is largely because the adversarial portion of the procedure—where borrowers are up against powerful lenders—is now eliminated.  Nonetheless, anyone with such proceedings that are pending still have to go through them, making discharge a formidable task for them.

The Legal Help You Deserve 

Filing for bankruptcy is a complicated, and sometimes frustrating process.  That’s why it’s important to have knowledgeable Miami bankruptcy attorneys working on your behalf.  To discuss your situation, schedule a confidential consultation at The Law Office of Julia Kefalinos in Miami today.

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