It is no secret that student loans in the US can reach exorbitant amounts. More often than not, these become a burden that weighs heavily on the individual long after they’ve finished their academic studies.
In the most extreme cases, student debts can become so overwhelming that the person may find themselves struggling to meet even the most basic human needs. Fortunately, California’s legal system offers a lifeline. Chapter 7 and Chapter 13 bankruptcy offer a way to deal with student debt and even partially or fully discharge it.
How to file for student loan bankruptcy?
Filing for student loan bankruptcy and proving that discharge is necessary are complex procedures, necessitating the assistance of highly proficient debt attorneys in San Diego. Therefore, your first step should always be to secure adept legal counsel, before delving into any other aspect of the process.
Determine undue hardship
In the majority of US states, California included, student loans are typically not dischargeable. Fortunately, “typically” is the operating word here. Recent developments in the field of bankruptcy law made discharging student debts more possible – but not easier.
In essence, the process entails proving the “undue hardship” – an extreme financial struggle caused by the borrower’s ongoing efforts to repay (student) loans, leading to them being deprived of the basic necessities.
The proof of undue hardship will be the baseline for your plea. However, from here, the process splits into two parallel paths: filing for bankruptcy & initiating adversary proceedings.
Filing for bankruptcy
With the baseline all set up, you’ll have to start the bankruptcy process. Here, you’ll first have to choose which type of bankruptcy you’ll be filing for:
- Chapter 7, also known as “liquidation bankruptcy”, involves selling your non-exempt assets in order to repay creditors as much as possible, discharging the remaining unsecured debts.
- Chapter 13, also known as “reorganization bankruptcy”, entails restructuring your debt and creating a repayment plan that may use up to 100% of your disposable income to repay creditors over the course of 3 – 5 years.
Once you decide which option is more feasible for you, your lawyer will help you fill out extensive paperwork involved in the process, and move on to file a petition with the California Bankruptcy Court.
Initiating Adversary Proceedings
Unlike other types of debts, student loan discharge requires filing for Adversary Proceedings in addition to bankruptcy. Doing this initiates the process of determining whether your debt should be discharged, based on the aforementioned potential for undue hardship.
Do note that Adversary Proceedings is a separate lawsuit and the time window to initiate it is extremely narrow. Therefore, filing for it should be done immediately after filing for either Chapter 7 or Chapter 13.
Proving undue hardship
Once adversary proceedings begin, you will be required to prove, beyond a reasonable doubt, that the continued efforts to repay your student loans will cause ongoing and significant financial struggle, preventing you from maintaining a minimal standard of living for you and your dependents.
Expect to be under extreme scrutiny and be prepared for the loan holder to oppose your petition. This is, by far, the most difficult part of the entire process, which is why you should have a lawyer that you can rely upon to provide strategic and assertive representation.
Who are the leading debt attorneys near me in San Diego?
If you’re looking to give yourself the best chance at getting your student loan discharged, turning to Bankruptcy Law Offices of Mark L. Miller should be your first choice. Over the years, our diligent attorneys helped over 12,000 individuals and businesses throughout San Diego County become debt-free.
With 40+ years of combined experience and extensive knowledge of the subject matter, we have what it takes to help you regain financial independence. Reach out to us today for a free consultation and let our sound strategies pave the way for your better future!