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Man Shows How to Get Rid of Student Debt

A recent story in U.S. News relays encouraging news of a man who had borrowed more than $240,000 in student loans for his children to attend college. While the man was later forced to declare bankruptcy with his wife, the Dept. of Education and the loan provider are settling with the man so that the student debt can be discharged.

How it Got This Far

The man took out several loans so that two of his children could attend Loyola University Maryland and a third could go to the University of Connecticut. About 14 years ago, though, the man lost his job. Since then, he and his wife have been forced to live on the $13,200 yearly salary she earns as a teacher’s aide. The couple blew through their savings and eventually filed for bankruptcy in 2012. The legal process between the couple and the Dept. of Education and Education Credit Management Corp. lasted for four years. The couples’ lawyer said that creditor and the Dept. of Education were willing to eventually settle probably because they foresaw an unfavorable verdict in their future should the case go further in court. That’s because, while discharging student loan debt can be very difficult, one of the most effective ways to do it is to show that not discharging the debt would cause “undue hardship.”

Why Discharging Debt is so Difficult Through Bankruptcy

Along with mortgages, student loans are the most difficult type of debt to discharge. Part of the reason is because the U.S. Congress sees roadblocks to getting rid of student loan debt as the best way to keep student loan programs viable for the large pool of applicants.

How to Rid Yourself of Student Loan Debt During Bankruptcy

The first step is filing a formal complaint with the bankruptcy court, then – like the man in the story above – proving that you’ll suffer undue hardship because of the debt. The courts have their own ways of assessing what hardship is. One of the most common tools is The Brunner Test, in which you’ll need to prove that:

  1. You’ll be unable to maintain a minimal standard of living – not only for yourself but for anyone dependent upon you as well
  2. Your current financial circumstances are not likely to change over the course of the repayment period
  3. You’ve tried – made a good faith effort – to repay the student loans

Facing Crippling Debt? Call The Oswalt Law Group

If your debt is unmanageable and seems to be spiraling out of control, you do have options – and they’re not limited to bankruptcy. Get in touch with us here at The Oswalt Law Group; we’d be more than happy to set up a completely free initial consultation to go over your situation. Our number is 602-225-2222.

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