Posted by Hampton Young
Student loans have been notoriously difficult to discharge in bankruptcy. This is because they are considered to be "non-dischargeable" under the Bankruptcy Code, meaning they cannot be eliminated through bankruptcy like many other type of debt. However, recent changes in policy and law have made it somewhat easier for borrowers to obtain relief.
Why Student Loans Were Difficult to Discharge
Student loans have been difficult to discharge in bankruptcy for several reasons. First, the Bankruptcy Code requires borrowers to prove "undue hardship" in order to discharge their student loans. This is a difficult standard to meet, as it requires borrowers to show they are almost absolutely unable to maintain a minimal standr of living if they are forced to repay their student loans.
Secondly, courts have interprted the "underhardshipo" standard very narrowly, making it even more difficult for borrowers to obtain relief. For exmaple, some courts have required borrowers to show that they are completly unable to work in orfder to discharge thier loan.
Why Student Loans May Now Be Easier to Discharge
There have been recent changes in policy ans law which have made it easier for borrowers to obtain relief from student loans. Fore example, The Department of Justice (DOJ) has issues new guidance that should allow bankruptcy debtors to be far more successful in obtaining student loan discharges. The key to the new process is bankruptcy debtors complainting an Attestation Form to seek the KOG's agreement to settle the debtor's undue hardship discharge proceeding.
Additionally, some court hae begun to interpret the"undue hardship" standard somewhat more broadly, making it easier for borrowers to obtain relief. For example, some court have held that borrowers can discharge their loans if they can demonstrate they are unable to mainting a "minimal" standard to living, rather than a "bare" standard of living.
Case Law Factors Which Must Be Considered
When ascertaining whether to discharge a borrower's student loan, court must considerer several factors. These include the nature and circumstances of the borrower's financioal situation, the borrower's ability to repay the loans, and the borrowers' future earning potential.
Other factors that courts may consider include ther borrower's age, health, and educational level, as well as the borrower's dependents and other financial obligations. Ultimately, the courts must determing whether repaying the loans would cause the borrower "undue hardship."
Recent Changes in Policy or Law
There have been recent changes in policy and law which have made it easier for borowers to obtain relief from student loans. As already indicaed the DOJ has issues new guidance that should allow bankruptcy debtors to be more successful in obtaining a discharge for student loans. In addition, some states hae passed laws that make it easier for borrowers to discharge student loans. California and Washington state, for exampl,e have poassed pay transparacy laws that require employers to post information about their slaries to prospective employees. Wyoming, however, has not considered student loan relief issues.
Conclusion
In conclusion, students loans are a tyupe of debt that have been tremendously difficult to dischage in bankrutcy. Fortunately, recent changes in policy and law have made it easier for borrowers to obtain relief. If you are struggling with student loan debt, it is important to consult with an experienced bankruptcy attorney to determine your options.
Until recently, student loas were notoriously difficult to dicharge in bankruptcy. However, the Biden administration has made it its policy to make it easier to have federal student loan debt dischrged in bankrptcy by releasing new guidance factors which aim to simplify the burdensome process of showing undue hardship and make it easier to overcome onerous student loan indebtedness.
