Maybe You Can Discharge Federal Student Loans in Bankruptcy

Broken promises are a theme that runs through the lives of many borrowers of federal student loan borrowers. Their college advisers told them that it would only take eight semesters to graduate, so that, between federal grants and part-time employment, they would only need to borrow a small amount, which they would be able to repay quickly once they started working full-time after graduation. The media told them that well-paying jobs were abundant. Their parents promised them unlimited free housing and childcare. Their high school guidance counselors told them that if they took as many AP classes as possible in high school, started at a community college, and then transferred to a state school, the amount they would borrow for college would be negligible. 

Meanwhile, wages are low, and the price of everything, including college tuition, has skyrocketed, so former students are left high and dry, and the ones who left college without graduating, mostly because of financial pressures, are in even worse shape than the ones who graduated. Plenty of debt-ridden former students have filed for bankruptcy, but that has not solved their student loan problem. Until recently, discharging student loans in bankruptcy was virtually impossible. The most recent bankruptcy guidelines give bankruptcy courts more flexibility to discharge student loan debt, but your chances of persuading the bankruptcy court to do this are better if you work with an Oakland Chapter 7 bankruptcy lawyer.

Are Federal Student Loans the Debt Monster You Just Cannot Slay?

A bankruptcy filing enables you to discharge some debts but not others.  The debts you cannot discharge are the scariest ones. People have more stress about overdue taxes, child support, and court fines than they do about credit card debt, medical bills, and debt consolidation loans that they cannot repay. In general, debts related to the court and other government entities are the hardest to discharge, but at least by discharging your consumer debts, you free up funds to pay Uncle Sam. At least your court fines are a flat amount, though, and your child support stops accruing when your children grow up, even though it can take much longer to pay it off.

Student loans are especially insidious. It is easy for the court to garnish your paychecks if you fall behind on payments, and the interest piles up so quickly that you can easily end up owing several times what you borrowed. In the old days, you could declare bankruptcy and discharge your other debts but be stuck with your low-paying job, so your student loan lenders would continue garnishing your pay.

Under the new rules, judges can discharge your student loans if you are truly unable to pay. So far, bankruptcy courts have discharged more than $1.5 million in student loan debt.

Contact the Law Office of Melanie Tavare About Discharging Your Student Loan Debt

A debt relief lawyer can help you get maximum debt relief from your bankruptcy case, including discharging your student loans. Contact the Law Office of Melanie Tavare in Oakland, California, or call (510)255-4646 for a case evaluation.