In many cases, student loan debts grow to become an insurmountable obstacle in the life of an individual, with seemingly no way out of the endless circle of struggle and repayment. Fortunately, “seemingly” is the operating word here.
What most people do not know is that filing a bankruptcy claim via a reputable San Diego debt attorney can provide much-needed relief. What’s more – the relief does not have to be temporary!
Through Chapter 7 bankruptcy, it is possible to partially or, in some instances, even fully discharge student loan debt. Today, we’ll be exploring how you can use this opportunity to ensure a fresh start.
What happens to student loans in Chapter 7?
The issue with student loans is that they are treated differently than other types of debt by federal law. Unlike, say, medical bills or credit card debts, which are considered a “consumer purchase”, student loans are regarded as an investment into education. This was the primary reason why they were impossible to discharge – up until the beginning of 2023.
Recent developments in the field of bankruptcy law made some student debts partially or fully dischargeable in both Chapter 7 and Chapter 13. Needless to say, this change was welcomed by debtors throughout the US, as it represented a unique opportunity to regain financial stability.
Despite these changes, discharging student debt remains difficult, as it requires proving so-called “undue hardship” by filing for adversary proceedings, which can be an excruciating process. However, if you have a good lawyer – it is not beyond the realm of possibility!
Is Chapter 7 a good option?
Chapter 7 bankruptcy has several substantial upsides when it comes to debt relief, the most prominent being:
- Automatic stay halts all collection activities by creditors and it goes into effect almost immediately upon filing for bankruptcy, thereby giving you much-needed breathing room to reorganize and figure out your next steps.
- The timeframe for proceedings is typically quite short, both for bankruptcy and student debt discharge, often being resolved within a few months.
- The forgiveness of other unsecured debts, such as medical bills or credit card arrears, makes it so you can redirect funds toward actually repaying student loans, provided that this course of action won’t cause you undue hardship.
It should be noted that some debts, such as child support or taxes, are deemed non-dischargeable by federal law.
Additionally, Chapter 7 has some limitations, primarily in terms of eligibility for debt discharge and/or filing for adversary proceedings, as you have to meet either of the following criteria:
- Your current monthly income is below the state median;
- You must pass a means test.
With all of the above in mind, we can deduct that Chapter 7 bankruptcy is the most feasible option for individuals who:
- Have an outstanding amount of unsecured debt;
- Are facing creditor harassment, lawsuits, or wage garnishments due to the aforementioned debts;
- Do not have substantial assets that they cannot afford to lose in the liquidation process;
- Can prove that the continuation of student loan debt repayment would deprive them of the basic necessities.
Where can I find a dedicated San Diego debt attorney near me?
Located in the immediate vicinity of Old Town San Diego Historic Park, the Law Offices of Mark L. Miller offer personalized assistance to individuals overwhelmed by student loan debts.
Imbued with extensive knowledge of the subject matter and backed by decades of experience, our collective efforts helped over 12,000 individuals regain their financial independence.
Whether you need guidance filing for student loan bankruptcy or proving undue hardship through the Brunner test, our mindful and strategic approach ensures that you go through the process with a minimal amount of stress. Contact us today to schedule your free consultation and let us aid you in your fight for a stable financial future!