Can educational loans, such as the Federal Stafford, Federal PLUS, and private loans, be discharged through bankruptcy?
Generally, student loans cannot be discharged through bankruptcy. An individual seeking to discharge a debt in bankruptcy needs to bring an adversary proceeding against the lender. This means a bankruptcy debtor or the debtor’s attorney needs to sue the lender (often the US Government) and petition the court to determine that the debtor should not have to pay back the loan. There are a number of ways to determine how a court should decide whether the loan should be paid back. However, the one key to remember here is that most attorneys are going to charge an hourly rate for this work. The time to bring such a case consists of (a) preparing a complaint, (b) attending hearings, (c) answering discovery requests, (d) attending depositions, and/or (e) preparing for and attending a trial. Such costs can run many thousands of dollars. A better solution may be to simply contact the lender and ask for a modified payment plan. There are many low monthly plans available.
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Area 523(a)(8) of the US Bankruptcy Value, at 11 U.S.C., excepts from release debts for "an academic advantage overpayment or loan created, insured, or guaranteed by a government device, or created under any program funded in whole or in part by a government device or nonprofit institution; or an obligation to repay funds received as an academic advantage, scholarship, or stipend; or any other academic loan that is a qualified knowledge loan, as defined in section 221(d)(1) of the Internal Revenue Value of 1986, incurred by a person in debts who is an individual" unless "excepting such debts from release under this passage would impose an undue hardship on the person in debts and the debtor’s dependents". For the purpose of this passage, the definition of a qualifying knowledge loan includes loans created solely to pay the college expenses of an eligible undergraduate, where the undergraduate is either the person in debts, the spouse of the person in debts, or the dependent of the person in debts. Generally, undergraduate knowledge loans cannot be discharged through bankruptcy. text loans An personal seeking to release a debts in bankruptcy needs to carry an adversary proceeding against the lending company. This means a personal bankruptcy person in debts or the debtor’s attorney needs to sue the lending company (often the US Government) and petition the judge to figure out that the person in debts should not have to pay back the loan. There are a number of ways to figure out how a judge should decide whether the loan should be returned. However, the one key to remember here is that most attorneys are going to charge an hourly rate for this work. The time to carry such a case consists of (a) planning a complaint, (b) participating hearings, (c) answering discovery requests, (d) participating depositions, and/or (e) planning for and participating a trial. Such costs can run many lots of money. A better solution may be to simply contact the lending company and ask for a modified payment plan.
This is actually the problem with student loans these days and many people struggle because of it: no matter what your debt is, it cannot be discharged through bankruptcy. As far as I recall Obama has now an intention to re-establish this rules once again as no bankruptcy law seems to be working pretty bad. Unfortunately I do not really know the situation with private loans, so I guess it is better to check this with lenders directly. You know, I live in Canada and situation is way better here…the student loans debt is not that big as in the US…well I cannot even say that Canadians need to turn to urgent money help online as often as Americans do
Section 523(a)(8) of the US Bankruptcy Code, at 11 U.S.C., excepts from discharge debts for “an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or an obligation to repay funds received as an educational benefit, scholarship, or stipend; or any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual” unless “excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor’s dependents”. For the purpose of this paragraph, the definition of a qualifying education loan includes loans made solely to pay the higher education expenses of an eligible student, where the student is either the debtor, the spouse of the debtor, or the dependent of the debtor. In addition, the loans must be
