As a post-graduate student living in Florida, the weight of your student loans can cause a heavy financial burden. When your job does not pay what you expect, it can make paying your loans on time more difficult. A common question is whether or not you can discharge student loan debt in bankruptcy.
The Federal Student Aid office of the U.S. Department of Education states that it is possible to discharge a federal student loan in bankruptcy court. Rather than including your student loans as part of the standard bankruptcy proceedings, you need to request an adversary proceeding. This separate action requires works in conjunction with Chapter 7 or Chapter 13.
The court wants you to prove that the payments cause you or your dependents undue hardship. The court looks at your past history of good faith repayment efforts, keep in mind a minimal standard of living and the extent the hardship contributes to your repayment of the loan. These factors contribute to the overall decision of whether the court finds the loan payments a hardship on you.
During the proceeding, your creditors can challenge your request to have the loans discharged. The court may decide to discharge the loan on a full or partial basis. In other cases, your loan may end up with different terms for the repayment period.
If the court denies your request, you can work to create a new payment plan that works for your current situation. Your loan servicer wants to receive payments and often will work with you to achieve that.