Seeking higher education can be one of the most important steps in life for young adults. It can lead to better career prospects, knowledge in academic fields you are interested in, and provide you with your first experience of independence and adulthood. However, college tuition can be very expensive depending on what schools you apply to and scholarship programs you may be eligible for. Many students will often take out loans to cover the cost of tuition, even if it means putting themselves in a difficult financial situation for the foreseeable future.
Student loan debt is one of the biggest financial issues facing young adults today, often placing immense pressure on both current students and recent graduates. Although, thanks to a new policy update regarding federal student loans, student loan borrowers now have an easier means to have their loans discharged via bankruptcy. If you are thinking of declaring bankruptcy due to your student loans, please reach out to a Newburgh bankruptcy lawyer at The Law Office of Michael D. Pinsky, P.C. to learn more about your next steps.
How can my student loans be discharged via bankruptcy?
Bankruptcy can be a very useful tool for student loan borrowers who do not have the financial capability to pay off their debts. Unlike other forms of debt like medical bills, credit card bills, and other consumer debts, bankruptcy can completely discharge all student debt. However, using bankruptcy to wipe away student debt has been a notoriously difficult process which often discourages student loan borrowers from even attempting it. The reason for this was because borrowers would have to prove they could potentially suffer from undue hardship unless their debt was discharged. The problem with this is that the qualifications for this standard are extremely vague which makes it difficult to meet the criteria. This process will often involve a court analyzing your past, present, and future financial situation to determine if your circumstances qualify as undue hardship.
Because of the recent policy update for federal student loans, the process of having your student loan debt discharged through bankruptcy has become far less daunting. The United States Department of Justice (DOJ) has issued new guidelines and standards to make the process for student loan borrowers seeking to discharge their debt far more fair and accessible. The DOJ, working alongside the United States Department of Education (DOE), will now issue a new attestation form that specifies far more clearly what criteria borrowers must meet to qualify for a discharge of their loans via bankruptcy. Although it is essential to know that this new policy only applies to federal student loans, borrowers seeking a discharge of private student loans through bankruptcy are still susceptible to the original undue hardship process.
If you are currently dealing with student loan debt and are hoping to discharge it through bankruptcy, you should strongly consider contacting a dedicated bankruptcy lawyer from our firm for help.